Booklet 5 the Drug Problem and Organized Crime, Illicit Financial

THE DRUG PROBLEM AND ORGANIZED CRIME, ILLICIT FINANCIAL FLOWS, CORRUPTION AND TERRORISM

WORLD DRUG

REPORT 2017 5 This booklet constitutes the fifth part of the World Drug Report 2017. © United Nations, May 2017. All rights reserved worldwide. ISBN: 978-92-1-148297-3 eISBN: 978-92-1-060628-8 United Nations publication, Sales No. E.17.XI.11

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E-mail: [email protected] Website: www.unodc.org/wdr2017 PREFACE

I am proud to say that this year we are marking 20 As the World Drug Report 2017 clearly shows, there years of the World Drug Report. is much work to be done to confront the many harms inflicted by drugs, to health, development, Over the past two decades, the United Nations peace and security, in all regions of the world. Office on Drugs and Crime (UNODC) has been at the forefront of global research into complex areas Globally, there are an estimated minimum of of drug use and supply, supporting international 190,000 — in most cases avoidable — premature cooperation and informing policy choices with the deaths from drugs, the majority attributable to the latest estimates, information on trends and use of opioids. analysis. The terrible impact of drug use on health can also This year we are launching a new format, with the be seen in related cases of HIV, hepatitis and report available as five separate booklets: the execu- tuberculosis. tive summary, together with the report’s conclusions Much more needs to be done to ensure affordable and policy implications; a global overview of drug access to effective scientific evidence-based preven- use and supply; a market analysis of plant-based tion, treatment and care for the people who drugs; a market analysis of synthetic drugs; and a desperately need them, including those in prison thematic booklet on the links between drugs and settings. As just one example, this year’s report high- organized crime, illicit financial flows, corruption lights the need to accelerate accessibility to the and terrorism. We have done this in response to treatment of hepatitis C, a disease whose negative readers’ needs and to improve user-friendliness, health impact on people who use drugs is far greater while maintaining the rigorous standards expected than that of HIV/AIDS. from the Office’s flagship publication. Recent attention has focused on the threats posed The 2017 report comes at a time when the interna- by methamphetamine and new psychoactive sub- tional community has acted decisively to achieve stances (NPS). However, as the report shows, the consensus on a way forward for joint action. manufacture of both cocaine and opioids is increasing. These drugs remain serious concerns, and the The outcome document unanimously adopted at opioid crisis shows little sign of stopping. last year’s special session of the General Assembly on the world drug problem contains more than 100 The World Drug Report 2017 further looks at the concrete recommendations for implementing bal- links with other forms of organized crime, illicit anced, comprehensive and integrated approaches to financial flows, corruption and terrorism. It draws effectively addressing and countering the world drug on the best available evidence and, most of all, high- problem. lights the fact that much more research needs to be carried out in these areas. Moreover, at its sixtieth session, in March 2017, the Commission on Narcotic Drugs adopted resolution Corruption is the great enabler of organized crime, 60/1, reinforcing commitment to implementing the and opportunities for corruption exist at every stage outcome document and charting a course to the of the drug supply chain. However, too little is 2019 target date of the 2009 Political Declaration known about how different types of corruption and Plan of Action on the world drug problem, as interact with drug markets. well as strengthening action towards the Plan of The outcome document of the special session of the Action’s agreed goals and targets. General Assembly on the world drug problem and

3 4 WORLD DRUG REPORT 2017 reinforcing. and mutually which are themselves complementary and the 2030 Agenda for Sustainable Development, control conventions,drug humanrightsinstruments Nations andinlinewiththeinternational partners ening responses, working closelywithourUnited and problems. UNODCisfullyengagedinstrength an ever-changing and formidable array of threats Clearly, countriesmustbeabletoactandreact to trafficking. fight againstdrug inthe to involve othersectorssuchaspostalservices pointto the need further ways ofdelivering drugs and smallergroups becomingmore significant.New players involved, withlooser, horizontal networks the nature trade andthetypesof oftheillicitdrug technologies, such asthedarknet, thatare altering models are changing,withcriminalsexploiting new enue fororganized crime networks, butbusiness Drugs continue torepresent amajorsource ofrev- speed. selves continue to shift and diversify at alarming supply, traffickingroutes andthesubstancesthem- As we have use, seenwiththeNPSmarket, drug markets themselves.drug and terrorists groups are alwaysevolving, muchlike are notstatic.Relations between organized crime nexus remains patchyatbest.Moreover, theselinks However, evidenceontheorganized crime-terrorism underinfluenceofthe tory Taliban. opium poppycultivation inAfghanistanisterri- trade — by some estimates, up to85percent of non-State armed groups profiting from the drug It iswell establishedthatthere are terrorists and among otherformsoftransnationalorganized crime. terrorist groups profiting from trafficking, drug Security Council resolutions express concern about - ing continues to fall far short of politicaling continuestofallfarshort capacity-building andtechnicalassistance,fund- However, there remains anenormousneedfor tragic increase inopioidoverdoses inrecent years. and itsanaloguesand,Ihope,canhelptostemthe harder forcriminalstoillicitlymanufacture fentanyl fentanyl. drug stepwillmakeit This important two precursors andananaloguetothescheduled For example,inMarch, theCommissionscheduled drug-related challenges. equipped torespond swiftlyanddecisively toglobal Drugs have shown, theinternationalcommunityis the recent sessionoftheCommissiononNarcotic As thespecialsessionofGeneral Assemblyand that jointactionistargeted,effective andtimely. to theextentpossible,closegapsandensure international cooperationandinformation-sharing tively address challenges we drug need to strengthen collection andoperations.But ifwe wanttoeffec- are legitimate concerns about compromising sources, clearly touchuponsensitive intelligence,andthere terrorismthe linksbetween andinsurgency drugs, the evidencebaseforthesereports. Areas suchas Finally, IaskallGovernments tohelpusimprove norms. conventions andUnited Nations standards and ism, inlinewithcommitmentsunderthe terrorism andviolentextremof crime,corruption, usepreventionbased drug —butalsoprevention ofpreventionthe importance —science-andrights- challengesalsohighlight The manyevolving drug opment Goals. achieve related targetsundertheSustainable Devel of thespecialsessionGeneral Assemblyand mendations containedintheoutcomedocument to helpallMember States implementtherecom commitment. Further resources are urgentlyneeded United Nations Office onDrugs andCrime Executive Director Yury Fedotov - - - CONTENTS

BOOKLET 1 EXECUTIVE SUMMARY — CONCLUSIONS AND POLICY IMPLICATIONS

GLOBAL OVERVIEW OF DRUG DEMAND AND SUPPLY BOOKLET 2 Latest trends, cross-cutting issues

MARKET ANALYSIS OF PLANT-BASED DRUGS BOOKLET 3 Opiates, cocaine, cannabis

MARKET ANALYSIS OF SYNTHETIC DRUGS BOOKLET 4 Amphetamine-type stimulants, new psychoactive substances

THE DRUG PROBLEM AND ORGANIZED CRIME, BOOKLET 5 ILLICIT FINANCIAL FLOWS, CORRUPTION AND TERRORISM PREFACE...... 3 EXPLANATORY NOTES...... 7 KEY FINDINGS...... 9 INTRODUCTION...... 13 A. THE DRUG PROBLEM AND ORGANIZED CRIME �� 15 Major transformation of organized crime in recent decades ��15 Evolution of links between organized crime and drug trafficking ��18 Drugs remain an important market for organized crime ��18 State responses to drug trafficking groups ��19 B. DRUG PROCEEDS AND ILLICIT FINANCIAL FLOWS �� 21 Proceeds of drug crime ��22 Laundering drug profits ��25 Cross-border laundering: illicit financial flows ��27 Economic impact of drug money ��28 C. THE DRUG PROBLEM AND CORRUPTION �� 30 Importance of assessing levels of corruption ��30 Corruption along the drug supply chain ��31 Prosperity, corruption and drug markets ��31 Closing information gaps ��34 D. DRUGS, TERRORISM AND INSURGENCY �� 34 Terrorist, insurgent and non-State armed groups ��35 Funding of terrorist, insurgent and non-State armed groups ��37 Drugs and terror attacks ��38 Terror tactics and drug money ��41 GLOSSARY...... 43 REGIONAL GROUPINGS...... 45

5 Acknowledgements The World Drug Report 2017 was prepared by the Research and Trend Analysis Branch, Division for Policy Analysis and Public Affairs, United Nations Office on Drugs and Crime, under the supervision of Jean-Luc Lemahieu, Director of the Division, and Angela Me, Chief of the Research and Trend Analysis Branch. General coordination and content overview Graphic design and production Chloé Carpentier Anja Korenblik Angela Me Suzanne Kunnen Kristina Kuttnig Analysis and drafting Thomas Pietschmann Coordination Francesca Massanello Data management and estimates production Coen Bussink Administrative support Lorenzo Vita Anja Held Iulia Lazar Editing Joseph Boyle Jonathan Gibbons Review and comments The World Drug Report 2017 benefited from the expertise and invaluable contributions of UNODC colleagues in the Drug Prevention and Health Branch of the Division for Operations; the Corruption and Economic Crime Branch, the Organized Crime and Illicit Trafficking Branch and the Terrorism Prevention Branch of the Division for Treaty Affairs; and the Research and Trend Analysis Branch of the Division for Policy Analysis and Public Affairs.

The Research and Trend Analysis Branch acknowledges the contribution to the section on drugs, terrorism and insurgency in the present booklet by the Illicit Crop Monitoring team of the UNODC country office in Afghanistan.

The Research and Trend Analysis Branch also acknowledges the invaluable contributions and advice provided by the World Drug Report Scientific Advisory Committee: Jonathan Caulkins Paul Griffiths Marya Hynes Vicknasingam B. Kasinather Letizia Paoli Charles Parry Peter Reuter Francisco Thoumi Alison Ritter Brice De Ruyver

UNODC gratefully acknowledges the comments and advice provided on the section on drugs, terrorism and insurgency by the Analytical Support and Sanctions Monitoring Team of the United Nations Security Council. EXPLANATORY NOTES

The boundaries and names shown and the designa- All uses of the word “drug” in the World Drug Report tions used on maps do not imply official endorsement refer to substances under the control of the inter- or acceptance by the United Nations. A dotted line national drug control conventions. represents approximately the line of control in All analysis contained in the World Drug Report is Jammu and Kashmir agreed upon by India and Paki- based on the official data submitted by Member stan. The final status of Jammu and Kashmir has States to the United Nations Office on Drugs and not yet been agreed upon by the parties. Disputed Crime through the annual report questionnaire boundaries (China/India) are represented by cross- unless indicated otherwise. hatch owing to the difficulty of showing sufficient detail. The data on population used in the World Drug Report are taken from: United Nations, Department The designations employed and the presentation of of Economic and Social Affairs, Population Division, the material in the World Drug Report do not imply World Population Prospects: The 2015 Revision. the expression of any opinion whatsoever on the part of the Secretariat of the United Nations con- References to dollars ($) are to United States dollars, cerning the legal status of any country, territory, city unless otherwise stated. or area, or of its authorities or concerning the delimi- References to tons are to metric tons, unless other- tation of its frontiers or boundaries. wise stated. R stands for the correlation coefficient, Countries and areas are referred to by the names used as measure of the strength of a statistical rela- that were in official use at the time the relevant data tionship between two or more variables, ranging were collected. from 0 to 1 in case of a positive correlation or from 0 to -1 in case of a negative correlation. All references to Kosovo in the World Drug Report, if any, should be understood to be in compliance with Security Council resolution 1244 (1999). Since there is some scientific and legal ambiguity about the distinctions between “drug use”, “drug misuse” and “drug abuse”, the neutral terms “drug use” and “drug consumption” are used in the World Drug Report.

KEY FINDINGS

Organized crime groups branch out networks are becoming increasingly significant. In 2017, Europol estimated that such networks Organized crime groups have widened their port- accounted for 30-40 per cent of organized crime folio of illicit activities. New crime areas such as groups operating in countries in the European cybercrime and environmental crime have emerged. Fewer groups are exclusively dedicated to drug traf- Union. ficking, while more are also operating in other illicit Technology’s role in creating relatively sectors. low-risk drug markets Almost two thirds of drug trafficking groups oper- The mobile communications revolution has offered ating in countries in the European Union are new opportunities to traffickers. They no longer involved in more than one crime area, according to need personal contact with clients; instead, low-level research by the European Police Office (Europol), “runners” can collect cash and dealers can let the and that figure has been rising for years. Drug traf- customer know where to collect their drugs using ficking groups in Europe are frequently also involved messages sent over encrypted networks. in the counterfeiting of goods, trafficking in human The darknet allows users to buy drugs with a cryp- beings, smuggling of migrants and trafficking in weapons. tocurrency, such as bitcoin, and have their purchases delivered to them in a concealed manner. Typical Continued importance of drugs to buyers are recreational users of cannabis, “ecstasy”, organized crime groups cocaine, hallucinogens and NPS. They are less likely In 2014, transnational organized crime groups across to order heroin or methamphetamine. Although the the globe were estimated to have generated between darknet accounts for only a small percentage of drug approximately one fifth and one third of their sales, the market has been growing rapidly in recent revenues from drug sales. years. Europol identified some 5,000 international organ- About 30 per cent of cocaine proceeds ized crime groups operating in countries of the contributes to illicit financial flows European Union in 2017, and estimated that more About 30 per cent of the proceeds of cocaine sales than one third were involved in drug trafficking. at the global level was laundered abroad in 2009, This makes drug trafficking more widespread across according to a model developed by UNODC. A organized crime than organized property crime, 2016 study based on interviews with drug crime smuggling of migrants, trafficking in human beings, convicts in Italy came to a similar conclusion, sug- excise fraud or any other illicit activity. gesting that roughly one third of the money spent Drug trafficking no longer the preserve by cocaine users was being laundered across of large criminal groups borders. Groups with a strong hierarchical structure, such as Drug money can make countries poorer those in Mexico and Japan, and to some extent in In the short term, an inflow of drug money can the Russian Federation, continue to be involved in boost investment and local gross domestic product. the drug trade. Hierarchical, top-down organiza- But the long-term effects tend to be negative, par- tions are still the most widespread type of organized ticularly when drug-related proceeds comprise a crime group in Europe, according to Europol. sizeable portion of the total economy of a commu- However, there is evidence that looser, horizontal nity or a country. In this scenario, drug money has

9 10 WORLD DRUG REPORT 2017 Corruption also increasesCorruption thelevel of incomeine- investments. narco-economies, are unlikelytomakeorincrease vasive money-laundering that characterize justicesystemand per- firms, seeingthecorrupted In anarco-economy, Foreign thisisdoublytrue. eign investment, according to World Bank research. entrenchesCorruption poverty by discouragingfor poverty reinforceeachother Corruption, theillicitdrugtradeand pharmacists. doctors through and corrupt get drugs firms.At theconsumerlevel,in transport userscan customs officials and take advantage of weaknesses cals. Further down thechain,traffickersbribe companies inorder togetholdofprecursor chemi manufacturers may exploit workers in chemical ers may bribe judges and police officers, and level, farmersmaybribeeradicationteams,produc At theproduction forcorruption. opportunities supplychain,thereAt each stageofthedrug are supply chain Corruption existsallalongthedrug percentage points. overall economicgrowth by between 0.03and0.06 billion increase inmoney-launderingcouldreduce Cooperation and Development, suggests that a $1 17 countriesoftheOrganization forEconomic oped countries. One estimate, based on a study of growth insmallerandlessdevel- rates,particularly ciated withreductions inoverall annualeconomic money, activities,isasso includingfrom illicitdrug Studies suggest that an injection of laundered reinforces sector. theillicitdrug whichinturn oflaw andfacilitatescorruption, rule The riseofanilliciteconomyhelpstoweaken the not takeplace. of themarketlegitimateinvestments andnew may without accesstoillicitfunds,maybesqueezed out Inruption. the process, legitimate businesses, income andwealth distributionsandincrease cor- figures, create unfaircompetition,reinforce skewed export prices,distort the potentialtoinflateproperty known trafficking and to encourage drug research. Higher levels ofincomeinequalityare quality, according toInternational Monetary Fund

- - - - is anticipated,intermsofresearch, littleisknown For example,while,intuitively, suchacorrelation links across between and corruption countries. drugs strengths, theyhighlightapaucityofdataonthe of corruption. While these approaches have certain geographical areas; others have relied on perceptions Many studieshave focusedonspecificevents or between drugsandcorruption Lack ofunderstandingtherelationship trafficking. production and in turncausetheexpansionofdrug ate and exacerbate income inequality, which may may perpetu Incorruption. industry fact, the drug in theintraregional cocainetrade. landing strips, sold cocapasteand become involved introduction ofprecursor chemicalsandthe use of have provided security forcocacrops, taxed the Colombia goesbackdecades. At various times,they Forces ofColombia(FARC) tradein inthedrug The involvement Armed oftheRevolutionary Colombia inthedrugtrade Role oftheRevolutionaryArmedForces from theillicit narcotics economy. $400 million, half of which is likely to be derived the overall annualincomeofthe Taliban atabout lished pursuanttoresolution 1988(2011)estimated higher still. The Security Council Committeeestab The overall drug-related income,however, maybe vation of opium poppyandtraffickinginopiates. illicit opiatetradeintheformoftaxes ontheculti- raised about$150millionin2016from theAfghan UNODC estimated that non-State armed groups involvement trafficking. indrug number of Taliban leaderswhoare accusedofdirect Nations Security CouncilSanctions Listcontainsa Afghanistan. Further, theConsolidatedUnited opiate production, manufacture andtraffickingin documented. It hastaxed entitiesinvolved inillicit The Taliban’s involvement tradeiswell inthedrug groups: Taliban continuestobenefit United Nations-designatedterrorist investigation. needs further andthe wayviolence that corruption coexist also markets andpoliticalstructures;interact withdrug about the way that different typesof corruption - - 5 KEY FINDINGS

FARC agreed in 2016 to halt its involvement in the Huge variation in estimates of finances drug business after the peace agreement signed with of terrorist, insurgent and other non-State the Government. armed groups Evidence implicating other groups is thin Little reliable data exist for estimating the overall Media reports and some evidence from official wealth of terrorist, insurgent and other non-State sources link a number of other terrorist, insurgent armed groups, making it tricky to estimate the and non-State armed groups to the drug trade. For importance of the drug trade. Forbes International example, media reports claim that Islamic State in attempted to compile a list, but the income of the Iraq and the Levant (ISIL) and other armed groups wealthiest 10 groups (around $5 billion together) in Iraq and the Syrian Arab Republic produce and was highly skewed, ranging from $25 million to $2 consume “captagon” tablets — typically ampheta- billion per group. mine mixed with caffeine. The group operates in Limited evidence on drugs, terrorism and an area likely to be a manufacturing hub, according insurgency to seizure data, but no conclusive evidence has Much of the work in this area tracks a small number emerged so far, as other groups also operate in the of groups, or builds on sources with an interest in same area. emphasizing or diminishing certain links. Most Boko Haram has also reportedly helped drug traf- information on terrorism is collected by intelligence fickers to smuggle heroin and cocaine across West agencies and is classified, meaning that researchers Africa. During the trial of Boko Haram members have to rely on media reports and studies issued by in Chad, the court of appeal heard that considerable non-governmental organizations and think tanks. quantities of psychotropic substances had been recovered and that Boko Haram members were regularly involved in the trafficking in and consumption of those substances. Further north, some evidence suggests that Al-Qaida in the Islamic Maghreb has been involved in cannabis and cocaine trafficking, or at least in protecting traffickers, but that its overall income from the drug sector appears to have been rather modest. Income from drugs key for some terrorist, insurgent and non-State armed groups Much depends on the location of a particular group. Some have benefited from being based in areas where drug crops flourish. Groups that aspire to control large amounts of territory need huge financial resources, and have relied on organized crime and the illicit drug trade to fund their ambitions. Just one revenue stream of many for most groups Terrorist and other non-State armed groups are adept at tapping into multiple sources of revenue. If drug profits dry up, the groups may move into extortion, kidnapping for ransom, bank robberies, sale of natural resources or sale of cultural artefacts. However, groups aiming simply to stage shocking attacks on civilians can do so with negligible financial investment.

INTRODUCTION

Although presented as a stand-alone publication, of drones, the darknet and the emergence of network this booklet constitutes the fifth part of the World organizations in recent years. Next, the consequences Drug Report 2017. It investigates the connection of drug money in the international system are ana- between the drug problem and four areas of inter- lysed. The booklet then discusses the ways in which national concern — organized crime, illicit financial the drug trade and corruption reinforce each other. flows, corruption and terrorism/insurgency. The Finally, the extent to which groups including the discussion draws on research by UNODC and a Taliban, Islamic State in Iraq and the Levant (ISIL) wide range of outside sources to provide an up-to- and the Revolutionary Armed Forces of Colombia date assessment of these complex relationships. (FARC) have benefited from drug money is dis- cussed in depth, along with a broader analysis of the The booklet highlights where our knowledge is lack- links between terrorist, insurgent and other non- ing and provides ideas for areas of further research. State armed groups, violence and the illicit drug It begins by sketching out the transformation in trade. drug-related organized crime from the dismantling of the Colombian cartels in the 1990s, to the use

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5 A. The drug problem and organized crime

A. THE DRUG PROBLEM AND Major transformation of organized ORGANIZED CRIME crime in recent decades Organized crime groups seize Organized crime groups have existed in various parts new opportunities of the world for centuries,1, 2, 3 and they have been Organized crime groups have always been resourceful involved in the international drug trade for almost in adapting to change. Anything from counterfeiting 100 years.4, 5 Over this time, their operations and and fraud to kidnapping and trafficking in persons structures have been transformed by technology, has been considered fair game. Probably the most legislation and shifts in politics; many of the most visible example of this flexibility is the diversification infamous drug trafficking gangs have come and gone. that organized crime went through after the end of The importance of drug trafficking for organized alcohol prohibition in the United States of America crime seems to have reached a peak in the late 1980s in 1933. Criminal groups that had exploited and early 1990s, after which new “business oppor- prohibition for profit in the 1920s went after new tunities” emerged. Many of the current activities of “business opportunities” in a wide range of organized crime groups hardly existed a few decades potentially lucrative sectors in the 1930s. ago. Nevertheless, drug trafficking can serve as an Similarly, after a crackdown on organized crime incubator for the development of organized crime groups in various parts of the world in the 1990s groups. At other times, it may also be an activity (the collapse of the Medellín and Cali cartels in that organized crime groups take up after their estab- Colombia, for example; the arrest of major organ- lishment in other illicit markets. ized crime bosses in the United States and Italy, etc.), Overall, drugs continue to play an important role new groups emerged with more diversified portfolios for organized crime groups, which have found new that included environmental crime, cybercrime, ways to smuggle and sell their produce, hide their identity theft, the smuggling of migrants and money profits and intimidate their rivals, influence politi- laundering. Many of the present-day activities of cians and eliminate their enemies. organized crime groups hardly existed in the early 1990s. What is an organized In some cases, organized crime groups have been crime group? able to profit from tighter regulatory systems. When a Government legislates to control, for example, “A structured group of three or more persons, exist- hazardous waste, organized crime groups can step ing for a period of time and acting in concert with in and provide a cheaper service by circumventing the aim of committing one or more serious crimes or offences … in order to obtain, directly or indirectly, these new standards. The same can be said of regu- a financial or other material benefit.” latory systems aimed at protecting wildlife, cultural heritage or intellectual property. United Nations Convention against Transnational Organized Crime, 2000. In general, the ability of organized crime groups to shift between illicit markets is illustrated by the fact 1 Cyrille Fijnaut, “Searching for organized crime in history”, that many of them already operate in more than one The Oxford Handbook of Organized Crime (Oxford Univer- sector. In Mexico, for example, several major groups sity Press, 2014), pp. 53-95. run activities spanning multiple business lines.6 2 David E. Kaplan and Alec Dubro, Yakuza: Japan's Crimi- nal Underworld (Berkeley, University of California Press, 2012), pp. 18-21. 3 Jason Sardell, “Economic origins of the mafia and patron- 6 Cameron H. Homes, Organized Crime in Mexico (Potomoc age system in Sicily”, BSc project, Worcester Polytechnic Books, University of Nebraska Press, 2014); George Philip Institute, 13 March 2009. and Suana Berruecos, eds., Mexico’s Struggle for Public Secu- 4 Fijnaut, “Searching for organized crime in history”. rity (Springer, June 2012); Jonathan D. Rosen and Roberto 5 Michael Koutouzis and Pascale Perez, Atlas Mondial des Zepeda, Organized Crime, Drug Trafficking, and Violence in Drogues, Observatoire Géopolitique des Drogues (Paris, Mexico: The Transition from Felipe Calerdón to Enrique Peña Presses universitaires de France, 1996). Nieto (Lexington Books, July 2016).

15 2017

In recent years, diversification among criminal can communicate more rapidly, making them highly REPORT groups, including drug traffickers, has increased effective in delivering goods and harder to track rapidly. In 2013, the European Police Office down.13, 14 When individuals are targeted, the net-

DRUG (Europol) estimated that over 30 per cent of the work can quickly regroup around new players,15 organized crime groups operating in the European making them extremely resilient.16 The fragmenta- Union were involved in more than one crime area; tion of criminal markets with the emergence of small WORLD the proportion was over 50 per cent for drug traf- crime groups and even individual criminal entre- ficking groups. By 2017, the figure had risen to 45 preneurs is especially pronounced in online activities, per cent for all groups and 65 per cent for groups including the trafficking of drugs over the darknet.17 involved in drug trafficking. Three quarters of drug But drug trafficking is certainly not restricted to a trafficking groups were involved in trafficking more single type of criminal group. Strongly hierarchical than one type of drug. Crimes frequently linked to groups18 such as those in Mexico, Japan and to some drug trafficking in Europe include the counterfeit- extent the Russian Federation19 continue to be ing of goods, trafficking in human beings, smuggling involved in the drug trade. 7, 8 of migrants and trafficking in weapons. Transformation of organized crime and Structural transformation of organized drug markets through technology and crime groups logistics Hierarchical structures have a major weakness: they Organized crime groups are locked in fierce com- can be easily dismantled when detected by the petition, not only with the authorities but also with authorities. Some hierarchical crime groups have their rivals. As is the case for any commercial activ- reshaped their structures in recent decades to become ity with a strong field of competitors, crime groups networked organizations. At the same time, smaller wanting to stay ahead need to be first to deploy the groups with looser hierarchies have begun to par- latest technology. ticipate in international drug trafficking, often using new technologies to reduce the risk of detection. 13 Vy Le, “Organised crime typologies: structure, activities and Although most identified international organized conditions”, Internal Journal of Criminology and Sociology, crime groups in the European Union remain hier- vol. 1 (Lifescience Global, Mississauga, Ontario, 2012), pp. 121-131. archically organized,9 Europol suggests a trend away 14 Frederick Desroches, “Research on upper level drug from vertical structures towards horizontal crime trafficking: a review”, Journal of Drug Issues, vol. 37, No.4 groups operating along a network organization (October 2007), p.833. model (cellular structure and less rigid or permanent 15 UNODC, Results of a Pilot Survey of Forty Selected hierarchies).10 Loose criminal networks represented Organized Criminal Groups in Sixteen Countries (September 2002). 30-40 per cent of organized crime groups identified 16 Carlo Morselli, Inside criminal networks (2009); Toine Spap- by Europol in 2017.11 Although they exist in all ens, “Interaction between criminal groups and law enforce- drug markets, loose criminal networks are particu- ment: the case of ecstasy in the Netherlands” Global crime, vol. 12, No. 1 (2011), pp. 19-40; Paul A. C. Duijn, Victor larly present in the trafficking of herbal cannabis Kashirin and Peter. M. A. Sloot, “The Relative Ineffective- and synthetic drugs, including new psychoactive ness of Criminal Network Disruption”, Scientific Reports, 4, substances (NPS).12 This type of network is often 4238 (2014), p.1. more nimble than other types and their members 17 SOCTA 2017. 18 Le, “Organised crime typologies: structure, activities and conditions”. 7 Europol, SOCTA 2013: European Union Serious and 19 In the case of Russian organized crime groups the organiza- Organised Crime Threat Assessment (The Hague, 2103). tional structure is hierarchical though rather decentralized 8 Europol, SOCTA 2017: European Union: Serious and as groups are often composed of separate quasi-autonomous Organised Crime Threat Assessment (The Hague, 2017). “brigades” operating more or less independently from each 9 Ibid. other even though they tend to pool their resources (Fred- erico Varese, professor of criminology at the University of 10 SOCTA 2013. Oxford, quoted in “Fortune 5: The biggest organized crime 11 SOCTA 2017. groups in the world”, Fortune (September 14, 2014). Avail- 12 Wouter Vanhove and others, Yilcan: Yield of Illicit Indoor able at http://fortune.com/2014/09/14/biggest-organized- Cannabis Plantations (Gent, Academia Press, 2012). crime-groups-in-the-world/).

16 5 A. The drug problem and organized crime

Organized crime groups have long focused on speed- Still a niche market in the global context but with ing up transportation of drugs by using ships, strong growth potential, the darknet is an encrypted containers, aircraft or even by manufacturing their network where users can anonymously exchange own semi-submersible vessels. As a result, they have goods and services, both legal and proscribed. Dark- been able to transport ever larger amounts of drugs net users get drugs posted to them after paying in across the globe.20 a cryptocurrency such as bitcoin. Its anonymity reduces the risk of arrest for both dealers and users, The mobile communications revolution has offered and also eliminates other pitfalls associated with new risk-averse opportunities. Rather than engaging buying drugs, such as the possibility of falling victim in personal contact with clients, drug dealers can to other forms of crime in neighbourhoods where now use low-level runners to collect cash before let- drug dealing is rife.26 ting the customer know by text message where to collect their drugs. Even when dealers get caught, For the time being, the darknet accounts for only a they are rarely in possession of anything more than small percentage of drug sales. Typical buyers are a small quantity of any particular drug, clearly reduc- recreational drug users who mostly purchase can- ing their “business risk”.21 Added to this, dealers nabis, ecstasy, cocaine, various types of hallucinogen can use encryption software to protect their com- and NPS. They are less prone to ordering heroin munications and data — a problem for law and methamphetamine.27 But drug purchases on enforcement authorities that is compounded by the the darknet are growing rapidly in some countries28 growing popularity of native encryption on mobile and its more direct process cuts several links out of devices.22 As a result, a list of potential clients' tel- the supply chain.29 A study of so-called “crypto- ephone numbers saved on a cell phone or a SIM markets” concluded that nearly a quarter of their card is now a valuable asset that can even be traded overall revenue, both in September 2013 and in among crime groups. January 2016, was generated by transactions greater than $1,000, suggesting that some purchases are More recently, reports suggest that drug trafficking intended for offline distribution.30 gangs have been hacking into drone management systems used in the United States to police the Mexi- While drug trafficking over the darknet is still rela- can border23 and systems used by the port authorities tively small in scale and concentrated in developed in Antwerp to track containers.24 Europol has high- countries, it is fast growing and has the potential to lighted the emerging phenomenon of criminal significantly reduce the need for the large, staff- groups hiring specialist hackers and expects such intensive, drug distribution networks that have been activities to grow in importance.25 operating for decades in cities across the globe. If this were to happen, the results would be difficult to predict. For instance, the current cultivation areas of plant-based drugs would be unlikely to change. 20 Damián Zaitch, Trafficking Cocaine: Colombian Drug Entre- But at the distribution level, street dealers could end preneurs in the Netherlands, Studies of organized crime, vol. 1 (The Hague, Kluwer Law International, 2002). up in violent competition for their dwindling client 21 Agnés Cadet-Taïrou and others, “Substances psychoactives, base, or they may look for alternative ways of making usagers et marchés: les tendances récentes (2015-2016)”, Tendances, vol. 8, No. 115 (December 2016). 22 Europol, IOACTA 2016: Internet Organized Crime Threat 26 Cadet-Taïrou and others, “Substances psychoactives, usagers Assessment (The Hague, 2016). et marchés: les tendances récentes”. 23 “US border patrol drones hacked by drug cartels”, 27 Global Drug Survey 2016 and Global Drug Survey 2015. 3 January 2016. Available at www.hackread.com/us-border- Available at www.globaldrugsurvey.com. patrol-drones-hacked-by-drug-cartels/. 28 Ibid. 24 “To move drugs, traffickers are hacking shipping contain- 29 James Martin. “Lost on the Silk Road: online drug distribu- ers”, 21 October 2013. Available at https://motherboard. tion and the ‘cryptomarket’”. Criminology and Criminal vice.com/en_us/article/how-traffickers-hack-shipping- Justice, vol. 14, No. 3 (2014), p.362. containers-to-move-drugs. 30 Kristy Kruithof and others, Internet-facilitated Drugs Trade: 25 “Police warning after drug traffickers’ cyber-attack”, 16 Octo- An Analysis of the Size, Scope and the Role of the Netherlands, ber 2013, BBC News. Available at http://www.bbc.com/ Research Report Series (Santa Monica, California, Rand news/world-europe-24539417. Corporation, 2016).

17 2017

money. While violence in the core drug business transit markets, several so-called “big bosses” of REPORT (the supplier-customer relationship) might be organized crime in Italy and the United States were reduced with the spread of anonymous drug pur- also arrested during that decade. They had previ-

DRUG chases, it is less clear whether this will ultimately ously controlled much of the trafficking of drugs in result in more or less crime. their respective countries.36 After these disruptions, smaller groups emerged, some of which were spin-

WORLD Evolution of links between organized crime and drug trafficking offs from the dismantled groups. Many of them continued to rely on the drug trade, even though Most of the increase and involvement of organized the overall importance of drugs appears to have crime groups in drug trafficking worldwide occurred started to decline as organized crime groups discov- after the Second World War.31 While there were still ered new lucrative and less risky business some individuals involved in the illicit drug trade opportunities. in the 1960s and 1970s, groups became dominant Similarly, the emergence of new organized crime in the 1980s, when business became increasingly groups from the successor States of the former Soviet cross-border and complex. Union and other transition countries in Eastern The 1990s witnessed a new phase with the power- Europe in the 1990s seemed to presage the decline ful Medellín drug cartel collapsing in 1993 and the in significance of the drug trade for organized crime Cali cartel being taken out in 1995, eliminating the groups. These new groups were never primarily groups that had controlled much of the international focused on drug trafficking.37 However, a UNODC cocaine business.32 The fall of the Colombian cartels study with a global focus suggested that by 2002 heralded a series of changes in the drug trafficking half of the 40 criminal groups operating in the 16 scene during the 1990s, including the emergence countries investigated counted illicit drugs as their 38 of smaller groups. They turned out to be efficient main or core activity. in trafficking drugs but were less of an immediate Drugs remain an important market threat to the State as such. for organized crime In Myanmar, the Mong Tai Army had controlled Despite the transformations in recent decades and much of the production and export of heroin to a trend towards crime diversification, the drug countries in East and South-East Asia,33 prior to market continues to play a key role in organized being dissolved in 1996.34 This disrupted the supply crime activities. In Europe, illicit drugs not only chain it had established through Hong Kong, China constitute the single largest organized crime and Taiwan Province of China and on to the market,39 but also a market that shows a high degree markets in North America.35 In destination and of both collaboration and competition between organized crime groups across national, linguistic 31 David F. Musto, The American Disease – Origins of Narcotic 40 Control (Oxford University Press, 1987). and ethnic divisions. 32 Francisco E. Thoumi, Debates y Paradigmas de las Poliíticas de Drogas en el Mundo y los Desafíos para Colombia (Bogotá, World, The Brookings institution (Washington D.C., Academia Colombiana de Ciencias Económicas, 2015). 1996); David Amoruso, “The Golden Triangle: How triads 33 United Nations office for Drug Control and Prevention cornered the heroin market” (16 June 2016). Available at (ODCCP), “Main centres of illicit opium production http://gangstersinc.ning.com/profiles/blogs/the-golden- – Myanmar” in ODCCP Studies on Drugs and Crime, triangle-how-triads-cornered-the-heroin-market. Global Illicit Drug Trends 2001, pp. 44-59. 36 Koutouzis and Perez, Atlas Mondial des Drogues. 34 Michael E. Brown and Sumit Ganguly, eds., Government 37 Vadim Volkov, “The Russian mafia; rise and extinction”, Policies and Ethnic Relations in Asia and the Pacific, CISA The Oxford Handbook of Organized Crime, Letizia Paoli, Studies in International Security, in cooperation with the ed. (Oxford University Press, 2014), pp. 159-176. Pacific Basin Research Center (London, 1997); Global Security.org, Mong Tai Army (MTA). Available at www. 38 UNODC, Results of a Pilot Survey of Forty Selected globalsecurity.org/military/world/para/sua.htm; Mong Organized Criminal Groups in Sixteen Countries Tai Army. Available at www.revolvy.com/main/index. (September 2002). php?s=Mong%20Tai%20Army. 39 SOCTA 2013. 35 Koutouzis and Perez, Atlas Mondial des Drogues; Paul B. 40 Mangai Natarajan, Marco Zanella and Christopher Yu, States, Global Habit – The Drug Problem in a Borderless “Classifying the variety of drug trafficking organizations”,

18 5 A. The drug problem and organized crime

Fig. 1 Importance of organized crime groups, crime groups involved in drug trafficking tend to ImportanceEuropean of organized Union crime groups, European Union be larger.42 As a consequence of globalization and cross-border networking, Europol concluded that non-European Union crime groups involved in the drug trade in Europe are nowadays made up of citizens from a large number of countries; most likely countries in Latin America, the former Soviet Union, Afghani- stan, Pakistan and countries in East Asia and in North Africa. Seventy per cent of organized crime groups in Europe are composed of members of many different nationalities.43 State responses to drug trafficking groups Source: UNODC, adapted from Europol, SOCTA 2017. The emergence of powerful and politically influential cross-border drug trafficking organizations in Europol identified some 5,000 international organ- the 1980s prompted national Governments to ized crime groups operating in the European Union commit to international legal obligations to fight in 2017, over 35 per cent of which were involved such criminal activities. in drug trafficking — more than in property crime, the smuggling of migrants, trafficking in human One of the key instruments they adopted was the beings, excise fraud or any other illicit activity.41 United Nations Convention against Illicit Traffic in Compared with organized crime groups operating Narcotic Drugs and Psychotropic Substances, 1988, in other crime areas, such as financial and economic which specifically warned of “the links between illicit crime, property crime and counterfeiting, organized traffic and other related organized criminal activities

Table 1 Organized crime groups active in illicit drug markets in Europe Strong evidence of involvement of Limited evidence of involvement of organized organized crime groups from crime groups from specific countries/regions specific countries/regions Bulgarian, Romanian, other eastern European, British, Heroin Albanian, Balkan, Turkish, African Dutch, Italian mafias, other Italian, Lithuanian, motorcycle gangs, Middle Eastern, other Asian, North African British, Finnish, French, other Italian, motorcycle gangs, Colombian, African, Albanian, other western European, Balkan, Bulgarian, Romanian, Cocaine Italian ('Ndrangheta), Spanish Russian/Georgian, Mexican, North African, South American

Albanian, Chinese, Dutch, African, Russian/Georgian, Turkish, Italian mafias, British, Cannabis North African, other Asian, Spanish Finnish, French, Irish, motorcycle gangs

British, Finnish, motorcycle gangs, other western Other illicit British, Dutch, Lithuanian, European, Albanian, Russian/Georgian, Turkish, Chinese, drugs other eastern European other Asian Source: Ernesto U. Savona and Michele Riccardi, eds., From Illegal Markets to Legitimate Businesses: the Portfolio of Organised Crime in Europe, Final Report of Project OCP – Organised Crime Portfolio (Trento, Transcrime, Università degli Studi di Trento, 2015).

Journal of Drug Issues (2015), 409-430; François Farcy, “Renseignement criminel et lutte contre la criminalité organisée en Belgique", Revue Française de Criminologie et de Droit Pénal, No. 4, (2015), pp 3-40. 42 SOCTA 2013. 41 SOCTA 2017. 43 SOCTA 2013.

19 2017 Nexus between organized crime and drugs in Germany

REPORT Some 37 per cent of prosecutions against organized crime Proportion of prosecuted groups involved in groups in Germany in 2015 were linked to groups involved illicit drugs in overall prosecuted organized crime in drug trafficking, according to government data. Europol groups, Germany, 2009-2015* DRUG estimated a similar proportion for the European Union as a whole (more than 35 per cent in 2017).a 45 Distribution of types of organized crime activities 41 40 WORLD 40 37 37 37 in Germany (per cent), based on number of legal 35 proceedings against organized crime groups, 35 33 2015* Money Environmental 30 Laundering, 2.1 crime, 0.9 Arms 25 Nightlife- trafficking, 0.9 related crime, Corruption, 0.4 20 Proportion of illicit drugs in

2.7 Other, 0.9 (percentage) crime organized Counterfeiting, 2.8 2009 2010 2011 2012 2013 2014 2015 Cybercrime, 3.9 * The total number of prosecutions against organized crime groups Violence, 4.9 has remained relatively stable in recent years: 579 in 2009 and 566 Drugs in 2015. Trafficking in 36.7 persons and Source: BKA, “Organisierte Kriminalität: Bundeslagebild, 2015". smuggling of migrants, 8.1 Proportion of drug offences in all reported offences and in all prosecutions related to organ- Tax and Economic Property ized crime groups, Germany, 2014 and 2015 customs fraud, crime, crime, 9 11.8 14.8 40 2014 36.7 35 32.9 2015 * N = 566 legal proceedings against organized crime groups, of 30 which 205 were primarily involved in drug trafficking. The total 25 number of suspects among those organized crime groups amounted to 8,675 persons in 2015s. 20

Source: Bundeskriminalamt (BKA), “Organisierte Kriminalität: Percentage 15 Bundeslagebild, 2015. 10 4.6 4.5 Estimated at 0.7 per cent of GDP in 2010, overall income 5 generated by organized crime in Germany seemed to be below 0 the European Union average, estimated at 0.9 per cent.b ProportionProportion of of drugsProportionProportion of proceedings of drugs The proportion of organized crime groups involved in drug inall alloffences offences relatedin organized to organized crime crime trafficking in Germany declined between 2009-2014, though it increased again in 2015 as details of prosecutions sug- Source: BKA, “Organisierte Kriminalität, Bundeslagebild 2015“ gest. In recent years, other crime areas have been growing in (and 2014); BKA, Polizeiliche Kriminalstatistik: Bundesrepublick Deutschland Jahrbuch 2015 (and 2014). importance: property crime (from 12 per cent in 2010 to 15 – per cent in 2015), cybercrime (from 0.7 per cent in 2010 to 4 per cent in 2015) and trafficking in persons and smuggling Nonetheless, drug trafficking has continued to be the main of migrants (from 6 per cent in 2010 to 8 per cent in 2015).c activity shared by organized crime groups in Germany. The While this trend reflects the diversification of activities and importance of illicit drugs in prosecution cases of organized areas in which organized crime is involved, it may also reflect crime groups remains far higher (eight times higher in 2015) the increasing attention of law enforcement authorities to than in overall reported offences.d other crime areas.

a SOCTA 2017. c BKA, "Organisierte Kriminalität, Bundeslagebild 2015 and 2010". Available at www.bka.de. b Ernesto U. Savona and Michele Riccardi, eds., From Illegal Markets to Legitimate Businesses: the Portfolio of Organised Crime d BKA, Polizeiliche Kriminalstatistik: Bundesrepublick Deutschland in Europe, Final Report of Project OCP – Organised Crime – Jahrbuch 2014, 62nd ed. (Wiesbaden, Kriminalistisches Portfolio (Trento, Transcrime, Università degli Studi di Trento, Institut, 2014). 2015) p. 36. 20 5 B. Drug proceeds and illicit financial flows which undermine the legitimate economies and money laundering, corruption and obstruction of threaten the stability, security and sovereignty of justice. The Convention extended the framework States”. Governments agreed on a broad range of for legal assistance, law enforcement cooperation measures to fight drug trafficking, including extra- and extradition from drug trafficking to all forms dition, confiscation of proceeds, mutual legal of organized crime. assistance, precursor control, anti-money laundering In parallel, efforts increased to deal with the drug measures and controlled deliveries. problem, not only from the supply but also from The 1988 Convention also stipulated that serious the demand side. The 1998 Political Declaration offences such as the production, manufacture, trans- and its Action Plans, the 2009 Political Declaration port, sale, importation, exportation of drugs44 and Plan of Action, as well as the Outcome docu- would be extraditable, ending years of impunity and ment of the 2016 special session of the United curtailing the ability of crime bosses to continue Nations General Assembly on the world drug prob- their operations from behind the walls of local pris- lem, stressed the importance of demand reduction ons. In the Americas, this may have prompted efforts as part of a balanced approach to address the organized crime groups to adjust their strategies. drug problem. Rather than sending drugs straight to lucrative final National Governments have also sought to counter destinations where extradition treaties were enforced, the technology harnessed by drug trafficking organi- they may have begun to make use of transit coun- zations by updating their standards on the acceptance tries from where extradition was less likely, even if of electronic evidence, training their staff in the prices were lower and profits were smaller. This detection and use of this kind of evidence, and intro- changed international drug trafficking flows as well ducing new strategies specifically targeting the use as the power structures of organized crime groups. of social and electronic media by drug traffickers. Colombian groups, for example, may have given up influence, enabling Mexican organized crime groups However, many Governments seem to have started to fill the void and develop into powerful drug car- shifting their focus from drug control to a broader tels. The change also may have created new range of criminal activities. The illicit drug trade is opportunities for smaller groups to get involved, increasingly seen as one crime typology among the expanding the chain of drug trafficking in transit many. Budgets have been rising for fighting terror- countries, notably in Central America and later in ism, trafficking in persons, cybercrime, money Africa, where drug trafficking groups brought insta- laundering, corruption and various other forms of bility and violence. economic crime. In parallel, international assistance for anti-narcotics activities and alternative develop- Successes in the fight against drug trafficking, partly ment has declined; remarkable because overall prompted by improved international cooperation, development assistance has continued to increase brought rising levels of risk and motivated several since 2009.45 organized crime groups to look for alternative opportunities that would attract less attention from authorities. Against this backdrop, a new interna- B. DRUG PROCEEDS AND tional tool was devised to fight organized crime. In ILLICIT FINANCIAL FLOWS 2000, the United Nations Convention against Trans- national Organized Crime, also called the Palermo Billions of dollars flow through the hands of drug Convention, was signed. Signatories agreed to crimi- trafficking organizations each year, and what they nalize participation in organized crime groups, do with that money can have a huge impact on local and wider economies. They might smuggle cash out 44 Covered by article 3, para. 1, of the Convention, this of their home country, buy or build real estate, invest includes activities such as production, manufacture, transport, sale, importation, exportation of drugs contrary to in restaurants and casinos for money laundering the 1961 or the 1971 conventions, unlawful distribution of precursor chemicals as well as money laundering and related activities; not included are offences related to the purchase, 45 World Drug Report 2016 (United Nations publication, Sales possession or cultivation of drugs for personal consumption. No. E.16.XI.7).

21 2017

REPORT Sustainable development goals: What the United Nations says

target 16.4 The proceeds of crime are defined in the United Nations DRUG By 2030, significantly reduce illicit financial and arms Convention against Transnational Organized Crime, flows, strengthen the recovery and return of stolen 2000 as well as in the United Nations Convention assets and combat all forms of organized crime. against Corruption, 2003 as “any property derived from WORLD or obtained, directly or indirectly, through the commis- The international community is currently developing sion of an offence”. indicators to measure the reduction in illicit financial flows, including those related to the illicit drug sector. This was previously described in the United Nations Convention against Illicit Traffic in Narcotic Drugs and Measurement concepts: from drug proceeds Psychotropic Substances, 1988 as “any property derived to illicit financial flows from or obtained, directly or indirectly, through the commission of an offence established in accordance with article 3, paragraph 1.” DRUG PROCEEDS

Gross profit of drugs = drug proceeds − cost of drugs

Net profit of drugs = gross profit − trafficking costs*

Profits available for laundering = net profit − living expenses of traffickers**

domestic international = illicit nancial ows related to drugs

* Transportation costs, intermediaries, bribes, etc. ** Living expenses, luxury goods, cars, etc.

purposes, or stash their profits in offshore financial drugs, it represents the quantity of drugs sold mul- centres. Depending on the method they choose, tiplied by respective retail prices. property prices can be distorted, unfair competition Some recent global estimates suggest that the pro- created, licit businesses crowded out, corruption ceeds of drug sales accounted for slightly more than bolstered and the climate to attract international one quarter of overall revenues of transnational investment spoilt, ultimately eroding rule of law organized crime groups in 2014, with a maximum and economic stability. range from around one fifth to one third of such This section assesses how much money drug-related revenues. In recent years, drug-related income seems crime generates and describes how trafficking groups to have represented the second largest source of channel their money into the wider economy, par- income — after counterfeiting of a broad range of ticularly when they send money abroad, in which goods — of transnational organized crime groups case it is termed “illicit financial flows”. at the global level.46 Understanding these processes is a vital component Drug proceeds in industrialized countries in the fight against both financial and drug-related Drug money was the second largest source of crimi- crime. nal revenue in the United States, the United Proceeds of drug crime Measuring the financial significance of illicit activi- 46 This was based on drug trafficking estimates of $426 to ties enables the comparison of criminal activities $652 billion out of a total transnational organized crime income of $1.6 trillion to $2.2 trillion in 2014 (Channing across sectors. The term “proceeds” is equivalent to May, “Transnational crime and the developing world”, “sales”, “turnover” and “revenue”. In the case of Global Financial Integrity (Washington D.C., March 2017).

22 5 B. Drug proceeds and illicit financial flows

Table 2 Proceeds of illicit drug sales and other crimes in selected industrialized countries, expressed as proportion of gross domestic product As a percentage of gross domestic product Year of Total crime, Total crime, Drugs estimate excluding tax evasion including tax evasion United States 2000 0.7% 2.3 % 8.0% United Kingdom 1996/2003/04 0.5% 1.2% a n.a. Australia 2003 0.3% 1.5 % n.a. Netherlands 2003 0.4% 1.7% b 3.5% Germany 2007 0.4% 1.3 % 2.3% Italy 2009 0.7% 7.7 % n.a.

Unweighted 0.5% 2.6 % 4.6%

average (0.4%-0.6%) (0.6%-4.6%) (2.2%-7.0%)

Weighted 0.6% 2.5 % 5.3%

average c (0.5%-0.7%) (0.5%-4.5%) (2.9%-7.7%)

Sources: UNODC, Estimating Illicit Financial Flows Resulting from Drug Trafficking and Other Transnational Organized Crime, Research report (October 2011). Based on: Peter Reuter and Edwin M. Truman, “Chasing Dirty Money – the Fight against Money Laundering” (Washington D.C., 2004); ONDCP, What America’s Users Spend on Illegal Drugs (Washington D.C., December 2001); Chris Groom and Tom Davies, “Developing a Methodology for Measuring Illegal Activity for the UK National Accounts”, Economic Trends, No. 536, July 1998, pp. 33-71; Stephen Pudney, Celia Badillo, Mark Bryan, Jon Burton, Gabriella Conti, Maria lacovou, “Estimating the size of the UK illicit drug market”, in Home Office, “Measuring different aspects of problem drug use: methodo- logical developments”, Home Office Online Report 16/06; Updates from an original paper undertaken by John Walker for the Australian Institute of Criminology in 1992, quoted in Brigitte Unger, The Scale and Impacts of Money Laundering (Cheltenham, Edward Elgar Publishing Company, 2007); FATF, Mutual Evaluation Report, February 2010 and International Monetary Fund, March 2010; International Monetary Fund, “Germany: Detailed Assessment Report on Anti-Money Laundering and Combating the Financ- ing of Terrorism”, IMF Country Report No. 10/78 (Washington D.C., February 2010). Statistisches Bundesamt, Wiesbaden; Consiglio Italiano per le Scienze Sociali, Il mercato illecito and SOS Impresa, XII Rapporto – Le mani della criminalità sulle imprese (Rome, SOS, 27 January 2010). a Partial estimate of a limited number of selected crimes. b A combined category of fraud and tax evasion was reported for the Netherlands; in order to provide an estimate of total crime, excluding tax evasion, it was assumed that the same breakdown existed in the Netherlands as in Germany. c Country results weighted by their gross domestic product in 2009.

Kingdom of Great Britain and Northern Ireland, In the European Union, the 2013 drug market is the Netherlands and Italy, according to estimates valued at approximately 24.3 billion euros a year.48 dating from 2000-2009 compiled by UNODC.47 According to studies that valued the drug market All other criminal activity was dwarfed in terms of in 2010, as a percentage of economic output, drug revenue by tax evasion, according to the study, which sales were less important in the European Union also included data from Australia and Germany. If than in the United States. In 2010, spending on tax evasion is excluded, drugs accounted for between drugs amounted to 0.23 per cent (27.7 billion euros) one fifth and one quarter of the total proceeds of of the gross domestic product (GDP) of the crime in the six countries combined over this period, European Union,49 compared with 0.7 per cent the data suggest. With tax evasion included, drugs ($109 billion) in the United States.50 still account for roughly 10 per cent of the total proceeds of crime. 48 Range: 21-31 billion euros (European Monitoring Centre for Drugs and Drug Addiction (EMCDDA), European Drug Report, Trends and Developments (Lisbon, 2016)). 49 Savona and Riccardi, eds., From Illegal Markets to Legitimate Businesses: the Portfolio of Organised Crime in Europe. 50 Beau Kilmer and others, What Americas Users Spend on 47 UNODC, Estimating Illicit Financial Flows Resulting from Illegal Drugs: 2000-2010, Research Reports Series, docu- Drug Trafficking and Other Transnational Organized Crime, ment No. RR-534-ONDCP (Santa Monica, California, Research report (October 2011), pp. 70-91. Rand Corporation, 2014).

23 2017

Table 3 Revenues from illicit markets per year (billions of euros) REPORT Seven western European Illicit market European countriesa Union

DRUG Illicit drugs 20.2 27.7 Trafficking in human beings Estimate available in only a few European countries Illicit trafficking in firearms - 0.4 WORLD Illicit trade in tobacco products 5.2 9.4 Counterfeiting 21.6 42.7 Illegal gambling Estimate available in only a few European countries Extortion racketeering Estimate available in only a few European countries Usury Estimate available in only a few European countries Missing trade Intra-community fraud 16.9 29.3 Cargo theft 0.36 0.42 Total 64.2 109.9 Source: Savona and Riccardi, eds., From Illegal Markets to Legitimate Businesses: the Portfolio of Organised Crime in Europe. a Finland, France, Ireland, Italy, Netherlands, Spain, United Kingdom.

Table 4 Illicit drug retail sales in constant currency units and expressed as a percentage of gross domestic product in the United States and 21 European Union countries 1988 1990 1995 2000 2005 2010 2015

Retail drug sales in constant currency units

In constant 2010 $ United States 195 146 95 108 119 109 .. (billions) 21 European Union In constant 2010 euros .. .. 13.1 15.3 19.2 19.2 18.0 countries* (billions)

Retail drug sales as a proportion of gross domestic product

United States % of GDP 2.22 1.57 0.90 0.85 0.83 0.74 .. 21 European Union % of GDP .. .. 0.62 0.49 0.37 0.34 0.32 countries*

Sources: UNODC calculations, based on: Kilmer and others, What Americas Users Spend on Illegal Drugs: 2000-2010; World Bank, World Development Indicators; Eurostat, Eurostat database. Available at http://ec.europa.eu/eurostat/data/database. a Austria, Belgium, Bulgaria, Czechia, Cyprus, Denmark, Estonia, Finland, Greece, Hungary, Ireland, Latvia, Lithuania, Luxembourg, Portugal, Romania, Slovenia, Slovakia, Spain, Sweden, United Kingdom. Note: Two dots indicate that data are not available.

The 2010 estimate in the European Union was Accounting for 42 per cent of the total proceeds of equivalent to roughly 25 per cent of overall crimi- organized crime after tax fraud was excluded,52 drugs nal proceeds, making drugs the third largest source were even more important in seven western Euro- of income from organized crime there, after tax pean countries — Finland, France, Ireland, Italy, fraud and counterfeiting. Excluding tax fraud, the Netherlands, Spain, United Kingdom — when drugs accounted for 34 per cent of total revenues taken together. of organized crime in the European Union.51 According to the statistical office of the European Union, Eurostat, European households in 21 Euro- pean member states spent a total of 21 billion euros 51 Savona and Riccardi, eds., From Illegal Markets to Legiti- mate Businesses: the Portfolio of Organised Crime in Europe. 52 Ibid.

24 5 B. Drug proceeds and illicit financial flows

(0.3 per cent of GDP) on drugs in 2015. This esti- Fig. 2 Estimated drug expenditure by households in mate, based on figures from countries representing 21 European Union countries around half of the total GDP of the European 0.90 0.9 25,00025,000 Union,53 showed a decline compared with 1995, 0.80 0.8 20,000 when spending was estimated at 0.6 per cent of 0.70 0.7 20,000 54 GDP. A similar decline has also been observed in 0.60 0.6 15,00015,000 the United States in the past two decades; illicit drug 0.50 0.5 sales fell from 1.6 per cent of GDP in 1990 to 0.7 0.40 0.4 per cent in 2010. 10,00010,000 0.30 0.3

Drug sales expressed in constant currency units have of GDP Percentage 0.20 of GDP Percentage 0.2 5,000 5,000 fallen in the United States since the late 1980s, but 0.10 0.1 in Europe they have increased over the past two - 0.0 0 0 Drug retail sales (millions of euros)

decades. This suggests that the marked decline in Drug retail sales (millions of euros) 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 the proportion of drug sales to GDP in Europe is 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 the result of stronger growth of GDP in other sec- Drug purchasesDrug purchases as a percentage as a percentage of GDP of (21 GDP EuropeanEU (21 EU tors rather than a declining drug market. countries)Union countries)countries), and 95% and including confidence-interval 95% confidence-interval 95 per cent confidence-interval Drug sales increased in the 21 European Union Drug purchasesDrug purchases in 21 European in 21 European Union countriesUnion countries in in countries by some 50 per cent from 1995 to 2008, currentin currentcurrent euros euros euros the year when the global financial crisis hit. From Drug purchasesDrug purchases in 21 European in 21 European Union countriesUnion countries in in 2008 to 2015, sales declined by some 10 per cent. constantin constantconstant euros euros euros Drug sales in both Spain and the United Kingdom Source: EUROSTAT. (0.6 and 0.4 per cent, respectively, of GDP) declined by 15 per cent over the period 2008-2015. The larg- In Afghanistan, the net value of opiate exports fluc- est decline was reported by Cyprus. This could tuated between 7 per cent and 16 per cent of GDP suggest a link between drug sales and the financial over the period 2011-2016, according to UNODC 56 crisis. However, estimates from Greece show a strong estimates. increase in drug sales over the period 2008-2015 In Colombia, according to some studies, the illicit (31 per cent), suggesting that the financial crisis was income from all crime activities (including drugs) not necessarily the determining factor for explain- has fallen consistently for almost two decades. The ing changes in the drug markets. Meanwhile, decline in drug-related income in Colombia went countries including Austria, Finland, Lithuania, in parallel with an overall reduction in the area under Luxembourg, Portugal and Sweden all recorded drug coca cultivation — by roughly 70 per cent over the sales as less than 0.1 per cent of GDP in 2015.55 period 2000-2013 — as well as strong declines in Drug proceeds in major drug-producing opium production.57 countries Laundering drug profits In contrast to the European Union or the United Estimates suggest that well over half of the gross States, where drug markets represent a very small profits generated by the drug trade are channelled proportion of the total economy, in present-day into money laundering. Afghanistan and in Colombia at the turn of the millennium, the situation was very different. In the late 1980s, the Financial Action Task Force (FATF) assumed that between two thirds and 70 per cent of drug money was laundered.58 The FATF

53 All European Union countries with the exception of 56 Afghanistan, Ministry of Counter Narcotics (MCN) Croatia, France, Germany, Italy, Malta, the Netherlands and UNODC, Sustainable Development in an Opium and Poland. Production Environment – Afghanistan Opium Survey Report 54 Eurostat database. Available at http://ec.europa.eu/eurostat/ 2016 (Vienna, 2017) and previous years. data/database. 57 World Drug Report 2016 and previous years. 55 Ibid. 58 United Nations International Drug Control Programme

25 2017

Table 5 Financial Action Task Force estimates of global amounts laundered in the late 1980s REPORT Estimate of drug sales in key markets (1988) $124 billion As a percentage of global GDP (1988) 0.8% DRUG Assumed proportion that is laundered 2/3 - 70% Estimate of amounts laundered related to drugs $85 billion

WORLD Proportion of global GDP (1988) 0.5% of GDP Estimated proportion of drugs in total amounts laundered 25% Estimated total amounts laundered in 1988 $340 billion As a percentage of global GDP 2.0% of GDP

Source: Economic and Social Consequences of Drug Abuse and Illicit Trafficking, UNDCP Technical Series No. 6, Vienna 1998; International Monetary Fund, Financial System Abuse, Financial Crime and Money Laundering-Background Paper, February 2001.

study, one of the first to make such an estimate, Another UNODC study developed a more detailed based its figures on interviews with experts in the model for the cocaine trade: the share available for field. money laundering of both retail sales (proceeds) and gross profits was estimated at 62 per cent in 2009.61 The conclusions broadly tally with a UNODC But the proportion varied hugely along the supply review of the literature from Australia, the Nether- chain. At the retail level, on average 44 per cent of lands and the United States in 2011.59 Those studies gross profit from cocaine was available for money used different methodologies, but the overall aver- laundering; the proportion rose to 92 per cent at age proportion of money available for laundering the wholesale level. out of crime proceeds was roughly 70 per cent, with reported figures ranging from 39 per cent to 83 per The UNODC study also suggested that the figure cent.60 Most of this money would be laundered varied according to location. Overall, the propor- though a small proportion of the cash may also be tion of gross profits available for laundering at the hidden and stocked for use at a later stage. wholesale level ranged from 87 to 94 per cent, and

(UNDCP), Economic and Social Consequences of Drug Sectors where organized Abuse and Illicit Trafficking, UNDCP Technical Series No. 6 (Vienna, 1998); International Monetary Fund (IMF), crime invests profits “Financial system abuse, financial crime and money laundering – background paper” (12 February 2001). •• Businesses that use cash 59 UNODC, Estimating Illicit Financial Flows Resulting from •• Low-tech, labour-intensive and not Drug Trafficking and Other Transnational Organized Crime, export-oriented sectors Research report (October 2011), pp. 70-91. •• Sectors with a high involvement of public 60 John Walker, “Estimates of the extent of money laundering administration and/or public subsidies in and through Australia,” paper prepared for Australian Transaction Reports and Analysis Centre, (Queanbeyan, •• Territorial-specific sectors, which can benefit Australia, John Walker Consulting Services, September and/or facilitate the control of the territory 1995); John Walker and Brigitte Unger, “Measuring global by criminal groups money laundering: the Walker gravity model”, Review of •• Sectors with weak or developing regulation, Law and Economics, vol 5 (2009); Brigitte Unger, The Scale which may imply weaker monitoring or more and Impacts of Money Laundering (Cheltenham, Edward infiltration opportunities (for example, renew- Elgar Publishing Company, 2007); Douglas Farah, “Money able energy or gaming) laundering and bulk cash smuggling: challenges for the Mérida Initiative”, Working Paper Series on U.S.-Mexico Source: Savona and Riccardi, eds., From Illegal Security Cooperation, Woodrow Wilson Center for Inter- Markets to Legitimate Businesses: the Portfolio of national Scholars/Trans-Border Institute, University of San Organised Crime in Europe. Diego, May 2010); United States, ONDCP, What America’s Drug Users Spend on Illicit Drugs, 1988-2000, (Washington D.C., 2001); National Drug Intelligence Centre, National Drug Threat Assessment 2009, (Illicit Finance – Bulk Cash 61 Estimating Illicit Financial Flows Resulting from Drug Smuggling) (Washington D.C., December 2008). Trafficking and Other Transnational Organized Crime.

26 5 B. Drug proceeds and illicit financial flows

Table 6 Net profits generated from the supply of heroin in seven western European countries (millions of euros) Retail Middle market Wholesale Total min max min max min max min max Revenues 4.56 7.60 2.78 4.62 2.27 3.75 4.56 7.60 Gross profits 1.77 2.97 0.51 0.87 0.65 1.09 2.93 4.94 Net profits 0.08 1.28 0.44 0.80 0.64 1.08 1.16 3.16 (funds available for money laundering) Net margin (proportion of revenues 2% 17% 16% 17% 28% 29% 25% 42% available for money laundering)

Source: Savona and Riccardi, eds., From Illegal Markets to Legitimate Businesses: the Portfolio of Organised Crime in Europe.

Cross-border laundering: How drug money is illicit financial flows laundered Drug traffickers spend their profits in a variety of •• Cash, including smuggling and stockpiling ways — from buying luxury items such as yachts •• Hawala, an informal system of money transfer and jewellery, to investing in real estate and using •• Purchase of real estate and related offshore financial centres. Some traffickers use laun- construction activities dering networks embedded into their overall •• Investment into cash-generating activities organizational structure and directly employ such as restaurants, casinos, red-light accountants and lawyers; other groups outsource to entertainment, gas stations “independent” networks that specialize in hiding •• Purchase of luxury items such as villas yachts, jewels the proceeds of crime. With the slow decline of hierarchical crime organizations and the emergence •• Investment in offshore centres of loose hierarchical or networked structures, the trend is moving towards professional outsourcing. at the retail level from 32 to 50 per cent, between While some drug money is laundered inside the subregions. In North America, about half of cocaine- country, some is hidden or reinvested across borders, related gross profits at the retail level were available constituting drug-related illicit financial flows. There for laundering; in Western and Central Europe, the is very limited information on the proportion and proportion was slightly lower (44 per cent). These level of drug profits that are laundered outside the figures suggested that 35 per cent of the income country. As with any commercial business, this will generated in cocaine retail sales in North America most likely depend on where the profits are to be and 26 per cent in Western and Central Europe enjoyed, and the margins that can be made on top were available for laundering purposes.62 Similarly, of the money generated. a study of seven western European countries (Fin- A model developed by UNODC for the 2009 land, France, Ireland, Italy, the Netherlands, Spain cocaine market estimated that about 30 per cent of and United Kingdom) by Transcrime showed a cocaine proceeds at the global level64 translated into broadly similar picture for heroin at the retail level. illicit financial flows.65 Another study based on The study estimated that between 25 per cent and interviews with prisoners involved in the drug trade 42 per cent of overall heroin retail sales in 2010 were available for investment into the legal economy; another way of saying that those funds were avail- Businesses: the Portfolio of Organised Crime in Europe. able for money laundering.63 64 The model arrived at a similar estimate for the proportion of gross profits from cocaine translating into illicit financial flows. 62 Ibid. 65 Estimating Illicit Financial Flows Resulting from Drug 63 Savona and Riccardi, eds., From Illegal Markets to Legitimate Trafficking and Other Transnational Organized Crime.

27 2017

REPORT What are illicit financial flows?

The term “illicit financial flows” is often used in different Other approaches more explicitly link illicit financial flows DRUG contexts where it may be associated with different mean- to the outcome of illicit activities or the financing of ings and objectives.a Early literature on illicit financial organized crime and terrorism. flows focused on capital flight from developing countries

WORLD The most widely used definition nowadays considers and disregarded whether the sources were licit or illicit. illicit financial flows to be generated when crime-related Critics say this methodology fails to capture processes proceeds (including money illegally earned, transferred such as bulk cash transfers, hawala payments or other or used) cross borders. transactions completed outside the official financial system.b, c

a World Bank, The World Bank Group’s Response to Illicit c Dev Kar and Joseph Spanjers, Financial Flows from Devel- Financial Flows: A Stocktaking (March 22, 2016). oping Countries: 2004-2013 (Global Financial Integrity, December 2015). b Volker Nitsch, “Trillion dollar estimate: illicit financial flows from developing countries”, Darmstadt Discussions Papers in Economics, (December 2015). Available at: http://tuprints.ulb.tu-darmstadt.de/5437/1/ddpie_227. pdf.

in Italy came to a similar conclusion, suggesting that Economic impact of drug money roughly a third of the money spent by cocaine users was being laundered across borders.66 The flow of drug money from the hands of traffickers, through launderers, and finally into the licit But drug trafficking groups trying to launder money economy, has all sorts of complex socioeconomic outside their countries will face costs, which will effects. reduce the actual amounts that can be invested back into the licit economy. Large-scale operations In the short term, an inflow of drug money back looking to launder hundreds of millions of dollars into the economy can boost investment and local could face fees of between 5 and 10 per cent, GDP, generating employment and revenue. The according to testimony from an undercover agent long-term effects, however, tend to be negative, par- of the United States Drug Enforcement ticularly when drug-related proceeds comprise a Administration who worked as a money launderer relatively larger portion of the total economy of a for a major cocaine smuggling operation in community or a country. In this scenario, drug Colombia and Venezuela (Bolivarian Republic of).67 money has the potential to inflate property prices, distort export figures, create unfair competition, Examples from Afghanistan suggest that people reinforce skewed income and wealth distributions,69 using the informal hawala money remittance system had to pay 1 to 2 per cent of the total funds for a 69 World Drug Report 2012; Estimating Illicit Financial Flows 68 money transfer. Resulting from Drug Trafficking and Other Transnational Organized Crime; IMF, Anti-Money Laundering and Com- bating the Financing of Terrorism (AML/CFT) Report on 66 Jonathan Caulkins and others, “Modelling the structure and the Review of the Effectiveness of the Program (Washington operation of drug supply chains: the case of cocaine and D.C., May 2011), Unger, The Scale and Impacts of Money heroin in Italy and Slovenia”, International Journal of Drug Laundering; Naím, Moisés, Illicit: How Smugglers, Traffickers Policy (Elsevier, 2016), pp. 64-73. and Copycats are Hijacking the Global Economy (London, 67 Affidavit of Jaime X. Cepero, in Federal District Court of William Heinemann, 2006); Francisco E. Thoumi, Illegal Massachusetts, 9 August 2013 (Melvin Soudijn and Peter Drugs, Economy, and Society in the Andes (Washington D.C., Reuter, “Cash and carry: the high cost of currency smug- Woodrow Wilson Press, 2003); International Narcotics gling in the drug trade”, Crime Law and Social Change, vol. Control Board (INCB), Report of the International Narcotics 66, No. 3 (Heidelberg, Springer, 2016), pp. 1-20)). Control Board for 2002 (New York, 2002); UNDCP, “The 68 Ibid; Samuel Munzele Maimbo, “The money exchange social impact of drug abuse”, prepared for World Summit dealers of Kabul, a study of the hawala system in Afghani- for Social Development, Copenhagen 6-12 March 1995; stan”, Working Paper No. 13 (World Bank, Washington Lamond Tullis, “Illegal drugs in nine countries − socio- D.C., 2003). economic and political consequences”, report prepared for

28 5 B. Drug proceeds and illicit financial flows and increase corruption. In the process, legitimate businesses, without access to illicit funds, may be How drug money affects the squeezed out of the market, and new legitimate economy 70 investments may not take place. The rise of an •• Distorts resource allocation from high-yielding illicit economy helps to weaken the rule of law and investments to investments that run a low risk facilitates corruption, which in turn reinforces the of detectiona vicious economic cycle. •• Distorts prices, including in the real estate sectorb When large amounts of illicit funds are available in •• Distorts exports and creates potential problems an economy, criminally financed entities may take with investment and economic over some lending functions. In cases like those, •• Creates unfair competition government actions designed to stop economies •• Crowds out licit activities and negatively from overheating, such as enforcing a restrictive affects direct foreign investmentc monetary policy, may not work. This may prompt •• Deepens corruption even more drastic monetary and fiscal measures. •• Strengthens skewed income and wealth Money laundering can lead to volatility in exchange distributionsd rates and interest rates owing to unanticipated inflows and outflows of capital, all of which tends a Bartlett, “The negative effects of money laundering on economic development”, p. 30; Estimating Illicit to have a negative impact on overall economic Financial Flows Resulting from Drug Trafficking and growth.71 Other Transnational Organized Crime; INCB, Report of the International Narcotics Control Board for Studies suggest that the flow of laundered money, 2002, Sales No. E.03.XI.1, New York 2002. including drug proceeds, back into the domestic b Estimating Illicit Financial Flows Resulting from Drug economy is associated with reductions in overall Trafficking and Other Transnational Organized Crime; 72 Thoumi, Illegal Drugs, Economy, and Society in the annual economic growth rates, particularly in Andes. smaller and less developed countries. One estimate, c Christine Ebrahimzadeh, “Dutch disease: wealth based on a study of 17 OECD countries, suggested managed unwisely”, IMF (28 March 2012). Avail- that a $1 billion increase in money laundering can able at www.imf.org/external/pubs/ft/fandd/basics/ reduce overall economic growth by between 0.03 dutch.htm. 73 d World Drug Report 2012; Estimating Illicit Financial and 0.06 percentage points. Flows Resulting from Drug Trafficking and Other Several tax havens around the globe have been Transnational Organized Crime. involved in money laundering activities — actively or unwittingly — and seem to have thrived economically, having witnessed an expansion in their combat all illicit financial flows.74 Financial centres financial service sectors. But international tolerance that do not adhere to international rules and towards such behaviour is wearing thin, and calls regulations face legal sanctions75 and may eventually have been made to develop strategies to prevent and lose access to global financial markets, which could have potentially negative consequences for their own UNRISD and the United Nations University, published as economic stability. Unintended Consequences; Illegal Drugs and Drug Policies in Nine Countries (Boulder, Colorado, Lynne Rienner, 1995); UNDCP, “Drugs and development”, UNDCP Technical Series, No. 1 (Vienna, 1994); UNDCP, Economic and Social Consequences of Drug Abuse and Illicit Trafficking, UNDCP Technical Series, No. 6 (Vienna, 1998). 74 Doha Declaration on Integrating Crime Prevention and 70 “Economic and Social Consequences of Drug Abuse and Illicit Criminal Justice into the Wider United Nations Agenda to Trafficking. Address Social and Economic Challenges and to Promote 71 Estimating Illicit Financial Flows Resulting from Drug the Rule of Law at the National and International Levels, Trafficking and Other Transnational Organized Crime. and Public Participation (General Assembly resolution 72 Peter J. Quirk, “Money laundering: muddying the macro- 70/174, annex). economy”, Finance & Development, vol. 34, No. 1 (IMF, 75 Brent. L. Bartlett, “The negative effects of money launder- March 1997), pp. 4-9. ing on economic development”, report for the Asian Devel- 73 Unger, The Scale and Impacts of Money Laundering. opment Bank (May 2002).

29 2017

Despite this, there have been few attempts to get to REPORT What the United Nations grips with the relationship between the drug prob- Conventions say lem and corruption. Previous studies focused on

DRUG “[I]llicit traffic generates large financial profits and specific events or geographical areas, but they have wealth enabling transnational criminal organizations rarely taken a wider approach or tried to identify to penetrate, contaminate and corrupt the structures elements of the relationship across the whole illicit WORLD of government, legitimate commercial and financial drug market. Better understanding of this relation- business, and society at all its levels”. ship is vital not only to combat the illicit drug trade, Preamble to the United Nations Convention against Illicit Traffic in Narcotic Drugs and Psychotropic Sub- but also to reduce corruption. stances, 1988. Importance of assessing levels of “Corruption is an insidious plague that has a wide corruption range of corrosive effects on societies. It undermines democracy and the rule of law, leads to violations of The Cosa Nostra and ‘Ndrangheta have long ben- human rights, distorts markets, erodes the quality of efited from high-level political connections in life and allows organized crime, terrorism and other Italy.77 In a similar way, some Mexican drug cartels threats to human security to flourish”. allegedly benefited from protection from local police Forward to the United Nations Convention against and local politicians.78 In Guinea Bissau, interna- Corruption (UNCAC, 2003). tional drug traffickers counted on the support of “Pursuant to article 4, paragraph 1, of the United influential segments within the political and military Nations Convention against Corruption, which states apparatus for a number of years.79 that States parties shall carry out their obligations under the Convention in a manner consistent with This kind of activity is often called high-level cor- the principles of sovereign equality and territo- ruption. It involves a small number of senior officials rial integrity of States and non-intervention in the in the government, police, customs or the justice domestic affairs of other States, the Conference of the States Parties to the United Nations Convention system being targeted in a business transaction with against Corruption establishes the … mechanism to bribes in exchange for either passive or active sup- review implementation of the Convention.” port facilitating illegal activities. In several cases Terms of reference of the Mechanism for the Review high-level corruption has posed a threat to the State. of Implementation of the United Nations Convention Organized criminal groups have attempted to influ- against Corruption. ence the outcome of democratic processes; for example, by funding election campaigns in favour of specific candidates or political parties through C. THE DRUG PROBLEM AND “vote buying”, intimidation or corrupting partici- pants in the political process. Moreover, a corrupted CORRUPTION judicial system and a lack of prison governance results in relative impunity. The drug problem and corruption have a mutually By contrast, in the European Union much of the reinforcing relationship. Corruption facilitates the corruption reported appears to be on a low level, production and trafficking of illegal drugs and this, according to research by Europol.80 Political cor- in turn, benefits corruption.76 The wealth and power of some drug trafficking organizations can exceed that of local governments, allowing them to 77 Letizia Paoli, “Italian organised crime: mafia associations and criminal enterprises”, Global Crime, vol. 6, No. 1 buy protection from law enforcement agents, crimi- (Taylor & Francis Group, February 2004), pp. 19-31. nal justice institutions, politicians and the business 78 Richard Snyder and Angélica Durán-Martinez, “Drugs, sector. In doing so, they further reinforce corrup- violence, and state-sponsored protection rackets in Mexico and Colombia”, Colombia Internacional, No. 70 (Bogotá, tion. The rule of law is both an immediate victim Universidad de los Andes, July/Dec. 2009), pp. 61-91. and, if it is already weak, an underlying factor that 79 UNODC, Transnational Organized Crime in West Africa: feeds this cycle. A Threat Assessment (Vienna, February 2013); UNODC, Drug Trafficking as a Security Threat in West Africa (Vienna, 76 Franciso Thoumi, Debates y Paradigmas de las Políticas de November 2008). Drogas en el Mundo (Bogotá, 2015). 80 EMCDDA and Europol, EU Drug Markets Report 2016,

30 5 C. The drug problem and corruption ruption at the level of elected national representatives Different factors may affect the level of vulnerability or agency heads appears to be rare. However, of an institution. For example, if law enforcement Europol found that corruption of city councillors, officials and magistrates are paid barely enough to mayors and other local level politicians was more provide for their households or believe they are common, especially in cities along the European treated unfairly, they may be more vulnerable to Union’s eastern land border.81 Overall, Europol con- bribes. Indeed, research suggests that an official’s cluded that organized crime groups involved in drug perception of how he or she is treated may have a trafficking in Europe rely on corruption to facilitate greater effect on the organizational culture of integ- their trafficking activities.82 rity than the size of remuneration itself.84, 85, 86, 87, 88 Other important factors include the existence of The impact of high and low level corruption on local effective internal control mechanisms, a strong drug consumption and levels of violence is not organizational culture of ethics, or the presence of always evident. The relationship with violence is transparency and accountability mechanisms that neither straightforward, nor well understood. Vio- help to promote public trust. lence is not always a direct outcome of drug trafficking, as demonstrated by the very different Prosperity, corruption and levels of violence registered worldwide in key transit drug markets or manufacturing countries.83 Whether more corruption means more or less violence is equally The connection between corruption and eco- context specific. Depending on the underlying pur- nomic development is often portrayed as pose of a bribe, the consequences may be different. asymmetrical: the lower the level of development, Corruption is typically associated with weakened the greater the corruption. While there is evidence institutions; and weakened law enforcement bodies that this is true for bribery and other forms of are by definition less capable of containing violent low-level corruption, less is known about high- crime. In certain environments a corrupt equilibrium level corruption in general. may temporarily create the impression of reduced Less advanced economies may not have the abun- violence; however, the negative effects of corruption dance of public resources available to build up strong in general become evident in the long run. institutions resilient to corruption, yet corruption Corruption along the drug itself will impede the process of generating, collect- supply chain ing and allocating such resources. Corruption and related forms of crime such as extortion discourage For criminal organizations, the expected results of corrupting a public sector organization vary depend- 84 “Fighting fraud in the Government”, Austin Association of ing on the agency involved. For example, a criminal Certified Fraud Examiners. Available at: www.acfe.com/gf/. organization may seek to corrupt a customs officer 85 Jeremy D. Foltz and Kweku A. Opoku-Agyemang, “Do to smooth the passage of drugs — by looking the higher salaries lower petty corruption? A policy experiment on West Africa’s highways”. Available at http://cega.berkeley. other way when a shipment is passing or by inform- edu/assets/miscellaneous_files/118_-_Opoku-Agyemang_ ing traffickers of checks. Police may be targeted to Ghana_Police_Corruption_paper_revised_v3.pdf. obtain inside information on planned operations in 86 Ting Gong and Alfred M. Wu, “Does increased civil service order to protect ongoing illegal activities. Judges pay deter corruption? evidence from China”, MPRA Paper No. 41815 (Munich University Library, 2012). Available and prosecutors could be bribed or otherwise influ- at https://mpra.ub.uni-muenchen.de/41815/1/MPRA_ enced to undermine police investigations, influence paper_41815.pdf. witnesses, reduce sentences or provide special prison 87 Deon Filmer and David L. Lindauer, “Does Indonesia have a “low pay” civil service?” Available at http://citeseerx.ist. treatment. psu.edu/viewdoc/download?doi=10.1.1.17.9760&rep=rep1 &type=pdf. EMCDDA – Europol Joint publications (Luxembourg, 88 Mushtaq H. Khan, “Governance and anti-corruption Publications Office of the European Union, 2026), p. 38. reforms in developing countries: policies, evidence and ways forward”, United Nations Conference on Trade and Devel- 81 EU Drug Markets Report 2016. opment, G-24 Discussion Paper Series, No. 42 (November 82 SOCTA 2017. 2006). Available at http://unctad.org/en/docs/gdsmd- 83 World Drug Report 2016. pbg2420064_en.pdf.

31 2017

Fig. 3 Sectors vulnerable to corruption in relation to drugs REPORT DRUG

WORLD Supply Vulnerable Actors chain sectors

• Eradication teams • Farmers seek to avoid eradication on their fields • Alternative development • Farmers and communities seek projects to benefit from alternative development investment • Entrepreneurs seek to sell their DRUG PRODUCTION products and services • Law enforcement • Producers and manufacturers seek (police, customs, etc.) to avoid controls, dismantlement of production sites and arrest • Criminal justice system • Producers and manufacturers seek to avoid sentencing

Source: EUROSTAT. • Chemical companies • Manufacturers seek to divert precursor chemicals

• Law enforcement • Traffickers seek to avoid (police, customs, etc.) controls, dismantlement of groups and arrest

DRUG TRAFFICKING • Criminal justice system • Traffickers seek to avoid sentencing • Transport companies • Traffickers seek to ship drugs by air, sea, land

• Medical doctors • Drug users seek to obtain prescriptions for non-medical use of drugs (e.g., opioids, ampheta- DRUG CONSUMPTION mines, medical cannabis)

• Pharmacies • Drug users seek to obtain medicines without prescription

investment, entrepreneurship and business forma- foreign investment.89 This becomes even more tion (which have prerequisites such as the rule of pronounced if a country begins to develop a narco- law and procedural transparency) and ultimately economy; foreign businesses may decide to pull may be responsible for the hindrance of prosperity investment once they find out that the justice system and economic development. More broadly, World Bank research suggests that 89 World Bank, “Combatting corruption”, 11 May 2017. Available at http://www.worldbank.org/en/topic/govern- corruption entrenches poverty by discouraging ance/brief/anti-corruption.

32 5 C. The drug problem and corruption does not work any longer, correspondent banks close Fig. 4 Prevalence of bribery, by type of public official down as money laundering risks become too high, and by level of income, 2013 and potential investors steer clear because they fear 70 their international image might suffer. All of this 60 leads to lower levels of investment and growth, and 50 a decline in some productive sectors of the economy.90 40 In situations like that, local authorities may pay less 30 attention to the origin of investment funds and 20 accept criminal finance to fill the void. Moreover, 10 corruption negatively affects business by raising (percentage) Prevalence 0 transaction costs, which reduces investors’ High- Upper- Lower- Low- competitiveness and leads to a poorer financial 91 income middle- middle- income performance overall. economies income income economies Studies confirm the relationship between develop- (30 countries) economies economies (14 countries) ment and bribery levels. As figure 4 shows, when (22 countries)(27 countries) the prevalence of bribery experienced by individuals Average of eight types Judiciary Police in their dealings with public officials is analysed,92 of public official it suggests that the police and the judiciary are the Source: United Nations, Commission on Crime Prevention and Criminal sectors most likely to be bribed in countries with Justice, World crime trends and emerging issues and responses in the field low economic development. of crime prevention and criminal justice, 20 March 2016 E/CN/15/2016/10. Note: The average of eight types of public official includes officials from the According to research by the International Monetary following sectors: education, judiciary, medical and health, police, registry and Fund (IMF), corruption also increases the level of permits, utilities, tax revenues and customs, and land services. income inequality.93 This process particularly affects the poorer members of society, who can expect their the expansion of drug production and trafficking.95 income growth to be reduced and the likelihood of In unequal societies, members of marginalized poverty to increase. groups may view corruption and involvement in criminal organizations as a viable way to improve Higher levels of income inequality are also known their lives.96 to provoke drug trafficking and corruption.94 In fact, the drug industry may perpetuate and exacer- Overall, corruption enables the growth of the illicit bate income inequality, which may in turn cause economy, which includes the illicit drug trade97 and many other illegal activities, such as trafficking in 90 Report of the International Narcotics Control Board for 2002, cigarettes, persons, guns or counterfeit goods. A pp 1-10. study for the European Union showed that levels of 91 Oman E. Hawthorne, “Do international corruption metrics corruption and organized crime activities were matter? Assessing the impact of Transparency International's highly correlated.98 This was particularly true for Corruption Perceptions Index”, Dissertation, Old Domin- ion University (2015), pp. 77-78. the illicit drug trade; the only criminal activity that 99 92 The prevalence of bribery is defined here as the percentage benefited more from corruption was prostitution. of the population that had contact with a public official and paid at least one bribe to such an official in the past 12 95 Report of the International Narcotics Control Board for 2002. months. 96 World Drug Report 2012. 93 Sanjeev Gupta, Hamid Davoodi and Rosa Alonso-Terme, “Does corruption affect income inequality and poverty?”, 97 SOCTA 2013; Michele Riccardi and Federica Sarno, Governance, Corruption, & Economic Performance, George. “Corruption”, Encyclopedia of Criminology and Criminal T. Abed and Sanjeev Gupta, eds., Chapter 17 (IMF, 2002); Justice, Gerben Bruinsma and David Weisbud, eds. (New Sanjeev Gupta, Hamid Davoodi and Rosa Alonso-Terme, York, Springer, 2013). “Does corruption affect income inequality and poverty?”, 98 Philip Gounev and Tihomir Bezlov, Examining the Links IMF Working Paper, WP/98/76 (May 1998). Between Organised Crime and Corruption (Sofia, Center for 94 World Drug Report 2012 (United Nations publication, Sales the Study of Democracy, 2010). No. E.12.XI.1). 99 Gouev and Bezlov, Examining the Links Between Organised

33 2017 How to fight corruption The United Nations Convention on Corruption suggests a list of possible strategies to prevent and fight corruption, including: REPORT •• Strengthening the effectiveness of law enforcement •• Ensuring that an array of enforcement measures exists institutions, including through the introduction of fur- to address corruption, including criminal justice and DRUG ther development of fair, merit-based human resource administrative or disciplinary procedures, as well as management practices, providing regular training and establishing effective systems for recovery of assets. ensuring proper scrutiny of key personnel, such as back- •• Promoting effective international cooperation, including WORLD ground checks. exchange of financial information. •• Introducing codes of ethics and addressing conflicts of •• Establishing systems to encourage reporting of corrup- interest, inter alia through the introduction of assets tion by public officials and citizens as well as undertak- and interest declarations systems. ing measures to protect reporting persons from retalia- •• Considering rotation of officers in vulnerable positions tion or victimization. To this effect many countries make where feasible to avoid creating permanent links with anonymous reporting of corruption possible. organized crime groups. •• Introducing effective witness protection systems. •• Identifying the specific corruption risks in organizations •• Promoting transparency in funding of election and developing and implementing specific plans to ad- campaigns, politicians and political parties. dress and mitigate them. •• Raising the awareness of society as a whole, including •• Promoting the cooperation across different agencies to students in schools and universities about negative reduce the likelihood of success from bribing a limited consequences of corruption. number of officials and to increase the risk of detection.

Closing information gaps D. DRUGS, TERRORISM AND Much of the available information provides only a INSURGENCY100 glimpse of the mechanisms of corruption used by traffickers. In addition to systematic reviews of drug From Latin America to the Middle East, funding and corruption prevention programmes to establish for armed violence has in certain instances long been the most effective strategies, there is also a need for linked to the illicit drug trade. more detailed factual knowledge. By some estimates, around half of the income of the Many studies rely on “perceptions” of corruption. Taliban in Afghanistan comes from its involvement Important as this is to gauge public sentiment, other with narcotics (mostly opiates);101 and FARC data are needed on the extent and nature of corrup- appears to have relied heavily on the cocaine trade tion across countries, and the ways in which it affects for much of the past two decades — until recently drug trafficking. The links between high-level and — with estimates a few years ago suggesting that low-level corruption must be analysed to assess between one quarter and half of its total income was where each form is most likely to emerge, and how derived from such illicit drug activities. Armed it will interact with different drug markets and polit- groups in the Syrian Arab Republic are said to use ical structures. amphetamine pills, and there are indications that Finally, the relationship between corruption and terrorist organizations in West Africa might be violence needs further investigation. In some con- involved in cocaine and cannabis smuggling. texts it appears that corruption subdues violence; in The drug trade has been a significant source of other contexts drug trafficking organizations appear income for some of those groups, for others it has to be pushed towards greater levels of violence. 100 This section covers entities placed on the Consolidated United Nations Security Council Sanctions list and other insurgent and non-State armed groups. 101 Seventh report the Analytical Support and Sanctions Moni- toring Team submitted pursuant to resolution 2255 (2015) concerning the Taliban and other associated individual and Crime and Corruption, quoted in EU Drug Markets Report entities constituting a threat to the peace, stability and 2016. security of Afghanistan, S/2016/842, para. 15.

34 5 D. Drugs, terrorism and insurgency been one of many revenue streams, while in some relates to the Taliban, which has taxed entities cases it may hardly have played a role at all. involved in illicit drug production, manufacture and trafficking. It has also been directly involved in drug Terrorist, insurgent and non-State 104 armed groups trafficking. Some evidence suggests that Al-Qaida in the Islamic While there is no universally agreed definition of Maghreb, which operates primarily in North and terrorism, the United Nations Security Council, West Africa, has been involved in cannabis and regional organizations and Member State Govern- cocaine trafficking, or at least in protecting ments have designated numerous armed groups as traffickers,105 though the group’s overall income “terrorist” groups, and international treaties define from the drug sector appears to have been rather terrorist offences. The Security Council has imposed modest.106 Individual commanders of the Move- sanctions on some 80 groups and more than 380 ment for Oneness and Jihad in West Africa, which individuals linked to the Taliban, Al-Qaida and broke away from Al-Qaida in the Islamic Maghreb, Islamic State in Iraq and the Levant (ISIL) on the seem at present to be directly involved in drug grounds that they are involved in terrorist activities trafficking.107 or support such activities.102 The Taliban, Al-Qaida, ISIL and its affiliate Boko Haram were responsible In and around the Syrian Arab Republic, seizure for 74 per cent of all deaths caused by terrorist, data on “captagon” pills — typically amphetamine insurgent and non-State armed groups in 2015.103 mixed with caffeine — suggest that a manufacturing hub exists in the area of operations of ISIL, Al-Qa- The most comprehensive evidence linking the ter- ida offshoot Jabhat Fateh al-Sham (formerly known rorist groups on which the Security Council has as Al-Nusrah Front)108, 109 and other armed imposed sanctions in relation to the drug trade groups.110 ISIL and other non-State armed groups have been linked in media reports to the production of “captagon”, but no conclusive evidence has What the United Nations says

“We, the States Members of the United Nations… 104 Security Council, “Letter dated 18 August 2015 from the [e]xpress deep concern about links between illicit Chair of the Security Council Committee established pur- drug production, trafficking and involvement of ter- suant to resolution 1988 (2011) addressed to the President rorist groups, criminals and transnational organized of the Security Council” (26 August 2015); UNODC, The crime, and are resolved to strengthen our coopera- Opium Economy in Afghanistan, An International Problem tion in response to those threats.” (New York, 2003); UNODC, Addiction, Crime and Insur- gency – The Transnational Threat of Afghan Opium (Vienna Political Declaration adopted by the special session of 2009); UNODC, The Global Afghan Opium Trade – A the General Assembly in June 1998. Threat Assessment (Vienna, July 2011). The General Assembly highlighted the need to 105 Daurius Figueria, Cocaine Trafficking in the Caribbean and West Africa in the Era of the Mexican Cartels (iUniverse, “[r]espond to the serious challenges posed by the Bloomington, Indiana, November 2012); Stephen A. increasing links between drug trafficking, … cyber- Harmon, Terror and Insurgency in the Sahara-Sahel Region: crime and money-laundering, and in some cases Corruption, Contraband, Jihad and the Mali War of 2012- terrorism, including money-laundering in connection 2013 (Routledge, 2014). with the financing of terrorism”. 106 Marc Mémier, “Aqmi et Al-Mourabitoun: le djihad sahélien Outcome document of the special session of the Gen- réunifié ?” Études de l'Ifri (January 2017), pp. 31-34. eral Assembly on the world drug problem held in 107 Ibid. 2016 (General Assembly resolution S-30/1, annex). 108 Report of the Secretary-General on the threat of terrorists benefiting from transnational organized crime (S/2015/366). 109 The Al-Nusrah Front was rebranded in 2016 as Jabhat Fateh al-Sham and announced breaking ties with Al-Qaida 102 See the Consolidated United Nations Security Council (ABC News, “Syrian branch of Al Qaeda rebrands in effort Sanctions list. to escape foreign air strikes”, 29 July 2016. Available at: 103 Institute for Economics and Peace, Global Terrorism Index http://www.abc.net.au/news/2016-07-29/al-nusra-rebrands- 2016. Available at http://visionofhumanity.org/?s=%22Glob in-effort-to-escape-foreign-air-strikes/7671390). al+Terrorism+Index+2016%22. 110 World Drug Report 2016.

35 2017

emerged so far. ISIL fighters111 as well as those of More recently, opium cultivation declined rapidly REPORT other groups involved in the civil war in the Syrian in some districts of the Afghan province of Nangar- Arab Republic have also been reported to consume har in 2016 after ISIL banned the practice in areas

DRUG “captagon”.112, 113 under its control. Neighbouring districts, by contrast, saw huge increases in cultivation in the same Based mainly in Nigeria and neighbouring countries, period.116 However, ISIL does not appear to have

WORLD Boko Haram has reportedly helped drug traffickers a consistent anti-drug stance. The Security Council to smuggle heroin and cocaine across the subre- Committee reported that ISIL fought against the gion.114 Further links between the group and the Taliban in 2015 for control of drug trafficking prof- drug trade were revealed during a court case in its in Nangarhar.117 ISIL now controls just a few Chad. In its judgment of 28 August 2015 in the districts in Nangarhar and no longer seems to sys- trial of 10 alleged Boko Haram members, the tematically interfere with drug production, although N’djamena court of appeals heard that considerable they still may do so in individual cases. quantities of psychotropic substances had been recovered during the search of the home of one of Looking beyond entities on which the Security the Boko Haram defendants. The court concluded Council has imposed sanctions, individual United that Boko Haram members were regularly involved Nations Member States and non-governmental in the trafficking in and consumption of those organizations identify several additional organiza- substances.115 tions as either terrorists, insurgents or non-State armed groups. While drug markets and terrorist groups may in some cases go hand in hand, there have been exam- The most substantial evidence linking such groups ples of terrorist groups whose influence led to to drug trafficking comes from Colombia, where reductions in drug cultivation, at least temporarily. they began to play a direct role in the drug trade in The Taliban’s opium poppy ban in 2001 led to a the 1980s and gained importance in the 1990s. They drastic reduction in cultivation in Afghanistan, provided security for coca crops, and taxed the intro- though they did not maintain this policy and in duction of precursor chemicals and the use of subsequent years actively participated again in the landing strips.118 FARC in particular played a prom- flourishing drug sector. inent role in taxing different aspects of the production chain and in selling coca paste, and later became involved in the cocaine trade to neighbour- 111 Max Kravitz and Will Nichol, “A bitter pill to swallow: con- ing countries.119, 120 nections between captagon, Syria and The Gulf”, Journal of International Affairs, vol. 69, No. 2 (18 May 2016). In neighbouring Peru, the Shining Path (Sendero 112 Lukasz Kamieński, Shooting up: A Short History of Drugs Luminoso) used the profits from cocaine processing and War (New York, Oxford University Press, 2016); Zeinab Abul-Magd and Elke Grawert, Businessmen in Arms: How the Military and other Armed Groups Profit in the MENA Region (New York, Rowman & Littlefield, 2016); Vijay Prashad, The Death of the Nation and the Future of the 116 MCN and UNODC, Afghan Opium Survey 2016 – Culti- Arab Revolution (University of California Press, Oakland, vation and Production (Vienna, 2016). California, 2016); Solomon Hussein, Islamic State and 117 United Nations Security Council, “Letter dated 18 August the Coming Global Confrontation, University of the Free 2015 from the Chair of the Security Council Committee State (Palgrave Macmillan, Bloemfontain, 2016); Robert J. established pursuant to resolution 1988 (2011) addressed to Bunker, Blood Sacrifices: Violent Non-State Actors and Dark the President of the Security Council”, 26 August 2015. Magico-Religious Activities, A Terrorism Research Center 118 Arlene Beth Tickner, Diego García and Catalina Arreaza, Book (Bloomington, 2016). “Actores violentos no estatales y narcotráfico en Colombia”, 113 Kravitz and Nichol, “A bitter pill to swallow: connections Politica Antidrogas en Colombia: Exitos, fracasos y extravios between captagon, Syria and the Gulf”. (Bogotá, 2011). 114 South Front, “Video: arms and drug trafficking in Africa. 119 Richard Snyder and Angelica Duran-Martinez, "Does ille- The role of Boko Haram”, Centre for Research on Globali- gality breed violence? Drug trafficking and state-sponsored zation (14 March 2016). Available at www.globalresearch. protection rackets." Crime, Law and Social Change, vol. 52, ca/video-arms-and-drug-trafficking-in-africa-the-role-of- No. 3 (Springer, 2009), pp. 253-273. boko-haram/5514293. 120 M. Romero, “Paramilitares y autodefensas 1982-2003”, 115 Judgment of 28 August 2015 by the N’djamena (Chad) Instituto de Estudios Políticos y Relaciones Internacionales court of appeals. Universidad Nacional de Colombia (Bogotá, 2003).

36 5 D. Drugs, terrorism and insurgency plants to fund its activities over four decades.121 Council Committee established pursuant to The group was particularly active in the 1990s. resolution 1988 (2011) estimated the overall annual income of the Taliban from all sources at around Insurgent groups and rebel armies operating in east- $400 million,126 half of which was likely to have ern Myanmar, notably in Shan state, have reportedly been derived from the illicit narcotics economy.127 been involved in the heroin trade for the past six decades122 and in methamphetamine manufactur- In Colombia, FARC seems to have been heavily ing and trafficking for the past two decades.123 reliant on coca/cocaine-related income, particularly at the turn of the new millennium. Despite a drop Elsewhere in the world, the evidence supporting in revenue as the Colombian coca/cocaine sector links between terrorist, insurgent and non-State started shrinking, drug-related income appears to armed groups and the illicit drug trade is less have remained an important source of income in rigorous. subsequent years as well. As an outcome of the peace Funding of terrorist, insurgent and process and the Peace Agreement signed in 2016, non-State armed groups there is now agreement that FARC is to halt its involvement in the drug business as it turns into a Data on the funding of terrorist, insurgent and non- legal political force. State armed groups is incomplete, with estimates varying widely; all aggregations must be treated with Estimates of the income generated by the illicit drug caution. However, such figures can give some likely trade need to be considered from the perspective of orders of magnitude. the overall income of terrorist, insurgent and other non-State armed groups, for which there is very little UNODC estimated that terrorist and insurgent authoritative information. For example, Forbes groups raised about $150 million in 2016 from the International attempted to value the world�s 10 Afghan opiate trade in taxes levied on the cultivation richest terrorist and other groups, with an estimated 124 of opium poppy and trafficking of opiates. Their total combined income of $4.9 billion in 2014. The overall drug-related income, however, may be higher. reported income distribution, however, appears to The Consolidated Security Council Sanctions List have been highly skewed, ranging from $25 million features a number of Taliban leaders who are accused to $2 billion among the 10 richest organisations.128 not only of taxing the drug business, but also of direct involvement in trafficking.125 The Security More than half of the income was attributed to groups officially recognized by the United Nations as terrorist organizations (ISIL, Taliban, Al-Qaida, 121 Mirella von Dun, Cocaleros – Violence, Drugs and Social Al-Shabaab and Boko Haram).129 ISIL was esti- Mobilization in the Post-Conflict Upper Huallaga Valley, Peru (Amsterdam, 2009); Francisco E. Thoumi, Debates y Para- mated to be the richest terrorist group in 2014, with digmas de las Políticas de Drogas en el Mundo y los Desafiós a turnover of roughly $2 billion. However, ISIL para Colombia (Bogotá, Academia Colombiana de Ciencias, suffered territorial losses and therefore obtained 2015), pp. 448-449; Patricik L. Clawson and Rensselaer W. Lee III, The Andean Cocaine Industry (Palgrave Macmillan lower tax income and revenue from oil and less US, 1998) pp. 180-183. potential for looting and confiscations. As a result, 122 Letizia Paoli, Victoria A. Greenfield and Peter Reuter, The World Heroin Market: Can Supply Be Cut? (New York, 126 First report of the Analytical Support and Sanctions Oxford University Press, 2009); Howard Abadinsky, Organ- Implementation Monitoring Team submitted pursuant to ized Crime 11 ed. (Boston, Cengage Learning, 2016). resolution 1988 (2011) concerning the Taliban and associ- 123 Pierre-Arnau Chouvy and Joël Meissonier, Yaa Baa: Pro- ated individuals and entities (S/2012/683), para. 34. duction, Traffic and Consumption of Methamphetamine in 127 S/2016/842, para. 15. Mainland Southeast Asia (Singapore University Press, 2004); 128 Forbes International, “The world’s 10 richest terrorist Abadinsky, Organized Crime. organizations” (12 December 2014). Available at https:// 124 Sustainable Development in an Opium Production Environ- www.forbes.com. ment – Afghanistan Opium Survey Report 2016. 129 Taking estimates of the “richest” terrorist/insurgency groups 125 The list, in addition, contains companies with close links as a basis (derived from interviews with representatives of to the Taliban and the drug business, including trading the intelligence community, security experts, counter-terror companies, money exchanges and hawala (money transfer) specialists as well as reports and analyses from international companies that support Taliban military operations and the non-governmental organizations, academic and government drug trade in Afghanistan. organizations and think tanks).

37 2017

the group’s income had reportedly declined by more with opium poppy cultivation; however, it is only REPORT than half by 2016,130 although it is likely that their since 2010 that high and increasing levels of opium expenses also declined sharply as they were no longer cultivation have shown a closer correlation with

DRUG in control of as many cities and villages as before. rising terrorist attacks. The reasons for this are com- Drugs and terror attacks plex, but armed groups have found it increasingly difficult to access “traditional” funding sources, WORLD Some 170,000 people lost their lives in terror attacks which may have resulted in a stronger reliance on between 2000 and 2015, including 30,000 in 2015 “alternative” financing such as drug trafficking. 131 alone, according to the Global Terrorism Database, The post-2010 rise in violence is also linked to a the largest systematic collection of open-source number of other factors, including the withdrawal information on terrorism acts worldwide. The data- of North Atlantic Treaty Organization (NATO) base, which has information on 163 countries going forces and subsequent disbanding of provincial back to 1970, uses the umbrella term “terrorism” to reconstruction teams, the emergence of destabiliz- cover attacks by terrorists, non-State armed groups, ing groups opposing the peace process, and the rebels and insurgents. expansion of the illicit economy into new areas such In some cases, there is a positive correlation between as the illegal exploitation of natural resources, which terror attacks, as defined by the Global Terrorism has led to the emergence of new insurgent groups. Database, and the world’s most intensive areas of More broadly, the areas under opium poppy culti- drug manufacturing and trafficking as reported in vation in Afghanistan are, to varying degrees, 2015. Some of those areas see a significant number controlled by diverse terrorist, insurgent and other of terrorist incidents. However, a correlation does armed groups, including the Taliban. Between 26 not necessarily point to a causal link. Some areas per cent and 85 per cent of the area under opium where the drug trade is intensive are not significantly poppy cultivation is estimated to be under varying affected by terrorism, and vice versa. degrees of Taliban influence. Opium poppy cultivation and insurgency in Afghanistan Fig. 5 Persons killed in terrorist attacks and Afghanistan, accounting for close to 13 per cent of area under opium poppy cultivation in all terrorism-related deaths worldwide between 2000 Afghanistan, 2000-2016 and 2015, gives a great insight into the potential 132 240,000 8,000 link between drug production and terrorism. 220,000 d 200,000

The Taliban was responsible for 73 per cent of all ill e k

180,000 6,000 s terrorism-related deaths in Afghanistan during the a) n

( h 160,000 o period 2000-2015, and 84 per cent of such deaths s n

140,000 r o in 2015. This was followed by ISIL, which accounted e

120,000 4,000 p

a ti

133 f

for 4 per cent of the total in 2015. v o

100,000 ti r High levels of insecurity in Afghanistan have been l 80,000 C u related to a range of events: conflict, disputes and 60,000 2,000 40,000 umb e terrorist activities. They have also been associated N 20,000 0 - 4 5 6 2 3 4 5 6 7 8 9 0 1 130 Stefan Heissner and others, “Caliphate in decline: an esti- 0 1 2 3 20 1 20 1 20 1 20 1 20 1 20 0 20 0 20 0 20 0 20 0 20 0 20 1 20 1 mate of Islamic State’s financial fortunes” (London, The 20 0 20 0 20 0 20 0 International Centre for the Study of Radicalisation and Political Violence, 2017). Available at http://icsr.info. Area under opium poppy cultivation 131 National Consortium for the Study of Terrorism and Persons killed in terrorist attacks Responses to Terrorism (START), Global Terrorism Data- base (June 2016). Available at www.start.umd.edu/gtd. Source: MCN and UNODC, Afghanistan Opium Survey 2016 132 Ibid. - Cultivation and Production (Vienna, 2016), and previous years; 133 Ibid. Global Terrorism Database.

38 5 D. Drugs, terrorism and insurgency Insurgency groups and opium poppy cultivation levels in Afghanistan, 2016 Map 1 Area under control of insurgent groups and area under opium poppy cultivation in Afghanistan, 2016 CHINA

UZBEKISTAN TAJIKISTAN

TURKMENISTAN Jawzjan Badakhshan Kunduz Balkh Takhar Level of opium cultivation per district

very low Faryab Samangan Baghlan low 35°N Sar-e-Pul Panjsher moderate Nuristan Badghis high Bamyan Parwan Kapisa Kunar Laghman very high Kabul Wardak Nangarhar Insurgency groups Hirat Ghor Logar Taliban control zone Daykundi Taliban support zone Paktya ISIL support zone

AN Ghazni Khost IR

F Uruzgan Farah Paktika Panjsher

IC O Nuristan Zabul BL

PU Kapisa Kunar

Hilmand Parwan Laghman Kandahar Nimroz

LAMIC RE PAKISTAN Kabul 30°N IS

Nangarhar 0175 50 300 Logar km Geographic projection: WGS 84 P70°aktEya Source: MCN and UNODC, Afghanistan Opium Survey 2016 – Cultivation and Production (Vienna, 2016). Insurgency groups

takenSource: Afghan fromistan opitheum surInstitutevey 2016 - C ulfortivati onthe and producStudytion, ofUNO War,DC/MCN November Goverment of Afgha 2016.nistan. Insurgency groups taken from the Institute for the Study of War, November 2016. Note: the boundaries and names shown and the designations used on this map do not imply official endorsment or acceptance by the United Nations. Dashed lines represents undetermined boudaries. DoNote:tted line the repres boundariesents approximatel y andthe Line names of Contro l shownin Jammu and and Kas hmtheir agreed designations upon by India and used Pakistan. on The this final stmapatus of Jamdomu not and Kaimplyshmir ha officials not yet bee endorsmentn agreed upon by the or parti acceptancees. by the The insurgency groups are mapped with differe nt classes of confidence, which have been merged for the purpose of this map. United Nations. Dashed lines represents undetermined boudaries. Dotted line represents approximately the Line of Control in Jammu and Kashmir agreed upon by India and Pakistan. The final status of Jammu and Kashmir has not yet been agreed upon by the parties. The insurgency groups are mapped with different classes of confidence, which have been merged for the purpose of this map. Geographic projection: WGS 84.

Table 7 Distribution of opium poppy cultivation areas according to variations in level of control by insurgent groups, Afghanistan, 2016 Opium Opium Opium poppy Opium poppy Opium Opium Opium Opium poppy poppy in in High- in Low- poppy poppy poppy poppy cultivation Taliban confidence confidence in three in High- in Low- in other 2016 control Taliban Taliban Taliban confidence confidence areas zone support zone support zone support ISIL support ISIS support zones zone zone Area (ha) 201,294 52,642 116,135 2,490 171,267 2,229 623 43,400 Proportion 100% 26% 58% 1% 85% 1.1% 0.3% 13% Source: MCN and UNODC, Afghanistan Opium Survey 2016 – Cultivation and Production (Vienna, 2016); Government of Afghanistan. Insurgency groups taken from the Institute for the Study of War, November 2016.

A socioeconomic survey conducted in Afghanistan situation in the north of the country coincided with in 2016 revealed that villages with opium poppy an increase in opium poppy cultivation. Clearly, a cultivation are more likely to be under the influence lack of government control is conducive to the of anti-government groups (61 per cent) than expansion and persistence of opium poppy 134 villages without opium poppy cultivation. Moreover, cultivation. it was found that the increased influence of 134 Sustainable Development in an Opium Production Environ- insurgency groups and a deterioration in the security ment – Afghanistan Opium Survey Report 2016.

39 2017

Fig. 6 Government control of villages, by Drug cultivation and terrorist, insurgent

REPORT poppy-cultivation status, Afghanistan, and non-State armed groups in Peru, 2016 Colombia and Myanmar

DRUG 100 Examples in Peru, Colombia and Myanmar show 18 80 30 the complex relationship between drug cultivation

WORLD 61 and the activities of terrorist, insurgent and non- 60 State armed groups. While a causal relationship cannot be established, reductions in drug cultivation 40 75 63 can go in parallel with lower levels of activity by 20 33 such groups; and lower levels of insurgent activities 0 can help to strengthen the application of the rule of Without With poppy National law by the authorities and thus contribute to a poppy cultivation reduction in illicit drug cultivation. cultivation Proportionall of villages (percentage) Others Anti-government In Peru, the area under coca cultivation shrank by 135 Central/regional/local government nearly 70 per cent from its peak in 1992 to 2015. During the same period, the number of people killed Source: UNODC and MCN, Sustainable Development in an Opium Production Environment – Afghanistan Opium Survey by terrorist, insurgent and non-State armed groups Report 2016 (Vienna, 2017). fell from 818 in 1992 to six in 2015; most of those

Fig. 7 Attacks by terrorist, insurgent and non-State armed groups and area under coca cultivation, Peru, 1978-2016 140,000 3,500

120,000 3,000

100,000 2,500

80,000 2,000

60,000 1,500 groups armed State - Cultivation (ha) 40,000 1,000

20,000 500

0 0 Attacks by non by Attacks 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Coca cultivation in Peru Coca cultivation in Alto Huallaga (and range of different estimates, 1978-1990) Attacks by non-State armed groups

Sources: UNODC and Comisión Nacional para el Desarrollo y Vida sin Drogas (DEVIDA), Perú Monitorea de Cultivos de Coca 2015 (July 2016 and previous years); DEVIDA, Información sobre Drogas Estadística en el Perú, Lima (July 2006); Policía Nacional del Perú, Anuario Estadístico 2015 (2015 and previous years); Policía Nacional del Perú, Direccíon Contra el Terrorismo, Anuario Estadístico 2009; Hernán Manrique López, “Las bases históricas del milagro de San Martin: control territorial y estrategias estatales contra el narcotráfico y subversión (198-1995)”, Politai: Revista de Ciencia Política, vol. 6, No. 11 (2015), pp. 33-51; Juan Briceño and Javier Martínez, “El ciclo operativo del tráfico ilícito de la coca y sus derivados: implicancias en la liquidez del sistema financiero”, F. León, y R. Castro de Mata, eds., Pasta básica de cocaína (Lima, 1989), pp. 263-264; Ibán De Rementería, “Evolution of coca leaf production in Peru and its macroeconomic role between 1978 y 1990”, Peru Report, April 1991.

135 World Drug Report 2016 and previous years.

40 5 D. Drugs, terrorism and insurgency fatalities were the result of operations by the Shin- Fig. 8 Registered victims* of non-State armed ing Path, which was behind 772 deaths in 1992, violence and area under coca cultivation, but just three in 2015.136 Most operations by the Colombia, 2000-2016 Shining Path took place in, or close to, the Alto 180,000 900,000 Huallaga region, which used to be the main coca 160,000 800,000 cultivation area in Peru. This is also illustrated by 140,000 700,000 the number of attacks and casualties suffered by the 120,000 600,000 personnel of Proyecto Especial de Control de Cultivos 100,000 500,000 de Coca (CORAH). Between 2005 and 2012 there 80,000 400,000 were around 30 attacks, with 133 injuries and 11 60,000 300,000 Number of victims deaths of CORAH personnel. The number of Cultivation (ha) 40,000 200,000 attacks by terrorist, insurgent and non-State armed 20,000 100,000 0 - groups over the past three decades shows a positive

correlation with the area under coca cultivation in 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 the Alto Huallaga region, with declines in coca cul- Area under coca cultivation tivation since the early 1990s going hand in hand Victims of violence by non-State armed groups with declines in attacks. * Victims of terrorist attacks, related homicides, mines, kidnapping, forced Similarly, in Colombia the area under coca cultiva- displacements, forced disappearance, torture, etc. tion shrank by 70 per cent between 2000 and 2013 Sources: UNODC and Gobierno de Colombia, Colombia Monitoreo de territorios afectados por cultivos ilícitos 2015 (July 2016 and previous during a decline in the number of operations by years); Unidad para la Atención y Peparación Integral a las Víctimas, Red FARC.137 The number of victims of violence by Nacíonal de Información, "Registro único de víctimas". Available at non-State armed groups also showed a marked http://rni.unidadvictimas.gov.co/RUV. 138 decline over the same period. The number of Fig. 9 Number of persons killed by terror attacks and people killed by non-State armed groups fell from area under opium poppy cultivation, Myanmar, 426 in 2000 to 137 in 2013; among them, the 1996-2015 number killed by FARC declined by almost 60 per cent, from 256 in 2000 to 106 in 2013.139 How- 180,000 90 ever, the apparent connection between coca 160,000 80 140,000 70 cultivation and violence has become less straight- 120,000 60 forward in recent years. Cultivation doubled 100,000 50 between 2013 and 2015 even as FARC-related kill- 80,000 40 ings declined further, by more than half.

Cultivation (ha) 60,000 30 In Myanmar, there is a weaker correlation between 40,000 20 the activities of various non-State armed groups and 20,000 10 Number of persons killed insurgents and the area under opium poppy culti- 0 - vation.140 The number of people killed in terror 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 attacks fell from 86 in 1996 to zero in 2006. They Area under opium poppy cultivation rose again to 58 by 2015,141 when the area under opium poppy cultivation had tripled. Persons killed in terror attacks Sources: UNODC, Southeast Asia Opium Survey 2015 (Vienna, 2016), and previous years; Global Terrorism Database. 136 Global Terrorism Database. 137 World Drug Report 2016 and previous years. Terror tactics and drug money 138 Unidad para la Atención y Preparación Integral a las Víc- timas, Red Nacíonal de Información, "Registro único de Evidence on the links between drugs, terrorism and víctimas" (1 April 2017). Available at http://rni.unidadvictimas.gov.co/RUV. insurgency is patchy, focuses on a small number of 139 Global Terrorism Database. groups, or builds on sources with an interest in empha- 140 World Drug Report 2016 and previous years. sizing or diminishing those links. Most information 141 Global Terrorism Database. on terrorism is collected by intelligence agencies and

41 2017

is classified. Open-source information largely comes REPORT from media reports and studies by non-governmental organizations and think tanks. Governments

DRUG rarely release detailed information to the public. Nevertheless, it is possible to draw some tentative

WORLD conclusions. In general, income linked to the drug sector is only one of several revenue streams for terrorist groups. If one revenue stream dries up, another can be tapped, such as extortion, kidnapping for ransom, bank robberies, sale of natural resources or sale of cultural artefacts.142 As a result, reducing drug production and drug trafficking may not be sufficient to effectively squeeze the financial resources of terrorist and other non-State armed groups and insurgents. At the same time, there is evidence that drug production and the activities of some of these groups may go hand in hand in some areas. Their level of dependence on the drug trade — whether taxing farmers, protecting routes and trade, or direct involvement in production and trafficking — will be determined by their size, structure, ideol- ogy, location and existence of alternative financial sources. The prominence of drugs in financing will thus vary strongly from one group to another. Insurgents aiming to control large amounts of territory are likely to need large financial resources, and involvement in organized crime activities, such as the drug business, may at least partly cover those funding needs. Yet much will depend on their strat- egy. A pointed attack focused on maximising media exposure and creating fear and intimidation does not necessarily need large or sustained funding. In fact, channelling smaller amounts of money through operations of that nature can reduce the risk of detection. Besides, there will always be a large number of “soft targets” for such an attack, which can easily be exploited by terrorists with or without drug money.

142 S/2015/366.

42 GLOSSARY amphetamine-type stimulants — a group of sub- new psychoactive substances — substances of abuse, stances composed of synthetic stimulants that were either in a pure form or a preparation, that are not placed under international control in the Conven- controlled under the Single Convention on Narcotic tion on Psychotropic Substances of 1971 and are Drugs of 1961 or the 1971 Convention, but that from the group of substances called amphetamines, may pose a public health threat. In this context, the which includes amphetamine, methamphetamine, term “new” does not necessarily refer to new inven- methcathinone and the “ecstasy”-group substances tions but to substances that have recently become (3,4-methylenedioxymethamphetamine (MDMA) available. and its analogues). opiates — a subset of opioids comprising the various amphetamines — a group of amphetamine-type products derived from the opium poppy plant, stimulants that includes amphetamine and including opium, morphine and heroin. methamphetamine. opioids — a generic term applied to alkaloids from coca paste (or coca base) — an extract of the leaves opium poppy (opiates), their synthetic analogues of the coca bush. Purification of coca paste yields (mainly prescription or pharmaceutical opioids) and cocaine (base and hydrochloride). compounds synthesized in the body. “crack” cocaine — cocaine base obtained from cocaine hydrochloride through conversion processes to make it suitable for smoking. cocaine salt — cocaine hydrochloride.

REGIONAL GROUPINGS

The World Drug Report uses a number of regional • Central Asia and Transcaucasia: Armenia, and subregional designations. These are not official Azerbaijan, Georgia, Kazakhstan, Kyrgyzstan, designations, and are defined as follows: Tajikistan, Turkmenistan and Uzbekistan • East Africa: Burundi, Comoros, Djibouti, • East and South-East Asia: Brunei Darussalam, Eritrea, Ethiopia, Kenya, Madagascar, Cambodia, China, Democratic People’s Mauritius, Rwanda, Seychelles, Somalia, Republic of Korea, Indonesia, Japan, Lao Uganda and United Republic of Tanzania People’s Democratic Republic, Malaysia, Mongolia, Myanmar, Philippines, Republic of • North Africa: Algeria, Egypt, Libya, Morocco, Korea, Singapore, Thailand, Timor-Leste and South Sudan, Sudan and Tunisia Viet Nam • Southern Africa: Angola, Botswana, Lesotho, • South-West Asia: Afghanistan, Iran (Islamic Malawi, Mozambique, Namibia, South Africa, Republic of) and Pakistan Swaziland, Zambia and Zimbabwe • Near and Middle East: Bahrain, Iraq, Israel, • West and Central Africa: Benin, Burkina Faso, Jordan, Kuwait, Lebanon, Oman, Qatar, Saudi Cameroon, Cabo Verde, Central African Arabia, State of Palestine, Syrian Arab Republic, Republic, Chad, Congo, Côte d’Ivoire, United Arab Emirates and Yemen Democratic Republic of the Congo, Equatorial Guinea, Gabon, Gambia, Ghana, Guinea, • South Asia: Bangladesh, Bhutan, India, Guinea-Bissau, Liberia, Mali, Mauritania, Maldives, Nepal and Sri Lanka Niger, Nigeria, Sao Tome and Principe, Senegal, • Eastern Europe: Belarus, Republic of Moldova, Sierra Leone and Togo Russian Federation and Ukraine • Caribbean: Antigua and Barbuda, Bahamas, • South-Eastern Europe: Albania, Bosnia and Barbados, Bermuda, Cuba, Dominica, Herzegovina, Bulgaria, Croatia, Montenegro, Dominican Republic, Grenada, Haiti, Jamaica, Romania, Serbia, the former Yugoslav Republic Saint Kitts and Nevis, Saint Lucia, Saint of Macedonia and Turkey Vincent and the Grenadines and Trinidad and Tobago • Western and Central Europe: Andorra, Austria, Belgium, Cyprus, Czechia, Denmark, Estonia, • Central America: Belize, Costa Rica, Finland, France, Germany, Greece, Hungary, El Salvador, Guatemala, Honduras, Nicaragua Iceland, Ireland, Italy, Latvia, Liechtenstein, and Panama Lithuania, Luxembourg, Malta, Monaco, • North America: Canada, Mexico and United Netherlands, Norway, Poland, Portugal, San States of America Marino, Slovakia, Slovenia, Spain, Sweden, Switzerland and United Kingdom of Great • South America: Argentina, Bolivia Britain and Northern Ireland (Plurinational State of), Brazil, Chile, Colombia, Ecuador, Guyana, Paraguay, Peru, • Oceania: Australia, Fiji, Kiribati, Marshall Suriname, Uruguay and Venezuela (Bolivarian Islands, Micronesia (Federated States of), Republic of) Nauru, New Zealand, Palau, Papua New Guinea, Samoa, Solomon Islands, Tonga, Tuvalu, Vanuatu and small island territories

o ceerate years since its incetion, te World Drug Report 2017 is resented in a ne ieooet ormat designed to imroe reader riendiness ie maintaining te eat o inormation contained itin. ooet summaries te content o te our suseuent sustantie ooets and resents oicy imications dran rom teir indings. ooet deas it te suy, use and eat conseuences o drugs. ooet ocuses on te cutiation, roduction and consumtion o te tree antased drugs cocaine, oiates and cannais and on te imact o ne cannais oicies. ooet roides an etended anaysis o te goa syntetic drugs maret and contains te u o te anaysis or te triennia goa syntetic drugs assessment. inay, ooet contains a discussion on te neus eteen te drug roem, organied crime, iicit inancia os, corrution and terrorism.

nanced y tis ne ormat, te World Drug Report 2017 is, as eer, aimed at imroing te understanding o te ord drug roem and contriuting toards ostering greater internationa cooeration or countering its imact on eat and security.

e statistica anne is uised on te D esite .unodc.orgdr

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